Financial Sector Credit Recovery Support Agreement: "Restriction on Sharing Delinquency Records Starting October"

Agreement Signed for COVID-19 Related Credit Recovery Support
Mutual Restriction on Sharing of Delinquency History Information

Representatives of financial industry associations, the Central Association, the Credit Information Service, and six credit information companies are taking a commemorative photo after signing the "COVID-19 Related Credit Recovery Support Agreement" on the 12th at the Bankers' Hall in Myeongdong, Seoul. (Bottom row from left) Seungbo Lim, President of the Korea Asset Finance Association; Juhyun Kim, President of the Credit Finance Association; Heesoo Jung, President of the Life Insurance Association; Kwangsoo Kim, President of the Korea Federation of Banks; Hyunjun Shin, President of the Korea Credit Information Service; Jiwon Jung, President of the General Insurance Association; Jaecheol Na, President of the Korea Financial Investment Association; Geunsu Kim, President of the Credit Information Association.

[Asia Economy Reporter Park Sun-mi] The financial sector has signed an agreement to actively implement credit recovery support measures and expressed their commitment to work together to support the credit recovery of individuals and sole proprietors facing difficulties due to the COVID-19 pandemic.

According to the Korea Federation of Banks on the 12th, representatives from financial industry associations, central associations, the Credit Information Center, and six credit information companies signed the "COVID-19 Related Credit Recovery Support Agreement" at the Bank Hall located in Myeong-dong, Seoul.

The financial sector agreed on the need to support individuals and sole proprietors who are struggling due to COVID-19 by not sharing delinquency history information mutually if they have fully repaid their overdue loans, so that their financial accessibility does not decrease.

First, for individuals and sole proprietors who have experienced small overdue payments from January 2020 to the end of August this year due to COVID-19 and have fully repaid them diligently by the end of the year, the mutual sharing of delinquency history information will be restricted to actively support credit recovery. The financial industry associations and central associations have pledged to actively work to enhance financial accessibility through supporting the credit recovery of COVID-19 victims who have fully repaid their overdue debts.

Additionally, even when using customers' delinquency history information for credit evaluation and loan screening, efforts will be made to minimize disadvantages in loan conditions such as interest rates and limits, and to reasonably consider temporary factors arising from the special situation of COVID-19 to reflect the credit recovery potential of individuals and sole proprietors as much as possible.

It is estimated that when the 'COVID-19 Credit Recovery Support Measures' are implemented, the sharing and use of short- and long-term delinquency history information for about 2.3 million individual borrowers will be restricted.

The core of the credit recovery support measures is that if individuals and sole proprietors have overdue debts of 20 million KRW or less after the COVID-19 outbreak and have fully repaid them, the delinquency history will not be shared among financial companies nor used by credit rating agencies.

A representative from the Korea Federation of Banks stated, "It is expected that the non-sharing of delinquency history during personal credit evaluation and loan screening will lead to an increase in credit scores and improved access to financial transactions such as card issuance and loans," adding, "Through changes and application of IT infrastructure related to this credit recovery support measure, the sharing and use of delinquency history information will be restricted starting early October."

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