One in Four Koreans Has a Poor Credit History for Loans

Kim Byung-wook, member of the Democratic Party of Korea (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] About one in four people nationwide are disadvantaged in loans due to a lack of financial history, highlighting the urgent need for institutional improvements to support financially marginalized groups.

According to data submitted by NICE Information Service to Kim Byung-wook, the Democratic Party's ranking member of the National Assembly's Political Affairs Committee, the number of people classified as lacking financial history in the first half of this year was approximately 12,715,700, accounting for about 27% of the 46,732,000 individuals subject to credit rating.

By age group, it was found that young people in their 20s and seniors aged 60 and above accounted for more than half.

The breakdown is as follows: under 20 years old, about 1,003,500; 20s, about 3,311,000; 30s, about 1,712,900; 40s, about 1,338,500; 50s, about 1,514,600; and 60 and above, about 3,835,000.

Those lacking financial history refer to individuals who have had no credit card usage in the past two years and no loan experience within the past three years.

Due to the absence of accumulated financial transaction information, they are less likely to be properly recognized for creditworthiness and are often evaluated with low credit ratings, making it difficult to borrow from regulated financial institutions or forcing them to borrow at high interest rates.

As a result, there have been repeated criticisms that it is unfair for loans to be blocked simply because of a lack of financial transaction history, even when individuals have the ability and willingness to repay.

Reflecting these concerns, credit rating agencies have been awarding additional points when individuals have a record of paying mobile phone bills and public utility charges for a certain period.

However, this is only possible if customers directly submit a consent form for information provision to the credit rating agency’s website or customer center and renew it after one year.

Lawmaker Kim said, "With the passage of the Credit Information Act, which I proposed to protect those lacking financial history from financial blind spots, I hope that benefits will also reach financially marginalized groups through MyData projects that guarantee individuals' rights to use their information."

This content was produced with the assistance of AI translation services.