My Credit Score Is Grade 3 at Kookmin Bank, but Grade 1 at Woori Bank?

Even with the Same Credit Score, Credit Ratings Vary by Bank... 'Thorough' Comparison Needed

[Asia Economy Reporter Park Sun-mi]Office worker Kim Geum-yung (alias), who received a personal credit score of 842 points from a credit rating company (CB), began comparing loan interest rates by bank to obtain a credit loan. At Bank A, a credit score of 940 points was required to qualify for credit grades 1 to 2 and secure a loan with an interest rate in the 2% range, but at Bank B, a score of 842 points was sufficient to qualify for grades 1 to 2. Mr. Kim chose Bank B, where he could get a loan with an interest rate in the 2% range despite having a lower score.

From this year, personal credit evaluations are conducted based on 'scores' rather than 'grades,' but it has been found that the criteria for reflecting evaluation scores vary significantly by bank. In the process of banks assigning their own credit grades, even with the same creditworthiness, differences in score application methods cause large grade discrepancies, requiring consumers to carefully compare.

According to the 'Interest Rate Status by Credit Grade for General Credit Loans' disclosure by the Korea Federation of Banks on the 26th, each bank's classification of internal credit grades based on personal credit scores provided by credit rating agencies differs. The average credit score of customers classified as internal credit grades 1 to 2 at KB Kookmin Bank is 940 points, whereas the average credit score for grades 1 to 2 customers at Woori Bank is 842 points. This means that customers classified as grades 3 to 4 at Kookmin Bank could be included in grades 1 to 2 at Woori Bank. Since loan interest rates applied by grade differ by bank, the grade difference is a significant consideration for consumers.

The Korea Federation of Banks, considering the change this year from the existing grade system to a score system ranging from 1 to 1000 points provided by credit rating agencies, provides both personal credit scores and bank-specific credit grades in the credit loan interest rate comparison disclosure. From the consumer's perspective, this allows them to anticipate how their personal credit score is applied to each bank's credit grade, aiding in bank selection.

Credit Grade Evaluation Methods Differ by Bank
Credit Scores Are for Reference

Even for the same credit grades 1 to 2, the credit scores applied by each bank vary because banks do not solely reflect the personal credit scores provided by credit rating agencies when classifying their own credit grades but also apply different factors according to each bank's strategy. Banks apply different important criteria when assessing customer creditworthiness, so even with somewhat lower credit scores, customers can be included in higher grades. Before the introduction of the score system, only credit grades 1 to 10 existed, and loans were uniformly rejected based on grades. The credit grade system was pointed out as a factor causing a 'threshold effect' for loans.

Woori Bank stated that rather than immediately adjusting the approximately 100-point difference in the average personal credit score of customers classified as grades 1 to 2 compared to other banks, it will observe the situation further before making a decision. A Woori Bank representative said, "Through the Korea Federation of Banks' disclosure, it has become possible to compare personal credit score levels by credit grade ranges across banks, but since the cut-off criteria for credit grades differ by bank, differences can certainly exist. If the difference grows large, we will conduct internal verification, but since this is the initial implementation phase, we plan to observe the situation before making a judgment."

An official from another bank advised, "While credit scores are an important factor in loan screening, the credit scores provided by credit rating agencies are not an absolute influence but rather a reference level when internally dividing credit grades. Consumers should understand that credit scores are not an absolute standard that determines loan interest rates and should carefully compare by bank."

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