Full Implementation of New Credit Scoring System Eliminating the 'Threshold Effect' Before the New Year

[Asia Economy Reporter Kim Hyo-jin] Starting next month, personal credit evaluation will be conducted based on 'scores' instead of 'grades.'

The Financial Services Commission and the Financial Supervisory Service announced on the 27th that the current credit grading system, which uses a 1 to 10 grade scale, will be reorganized into a credit scoring system displayed as 1 to 1000 points starting January 1st of next year.

The financial authorities introduced this measure to alleviate the loan 'threshold effect' caused by the credit grading system.

This aims to resolve the issue where individuals close to a higher grade within a grade range suffer disadvantages in loan screening and other processes.

An official from the financial authorities explained, "By introducing more detailed loan screening criteria, financial companies will no longer uniformly reject loans based on credit grades, which will improve financial accessibility for low-credit financial consumers."

Additionally, the financial authorities expect that individuals will be able to easily manage their credit by using credit scores, cumulative rankings, and customized credit management tips provided by personal credit evaluation companies (CB companies).

To minimize inconvenience to financial consumers and market confusion, the financial authorities have been piloting the credit scoring system since January last year at the five major commercial banks: KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup.

Going forward, the financial authorities plan to closely monitor the transition to the credit scoring system to ensure the system is stably established, and to provide immediate response and support for any difficulties by operating a rapid response team in cooperation with the Financial Supervisory Service, CB companies, and the Financial Association.

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