Savings Bank Central Association Launches Specialized Credit Evaluation System for Medium and Low Credit Borrowers

[Asia Economy Reporter Song Seung-seop] The Korea Federation of Savings Banks is applying a credit scoring system (CSS) specialized for evaluating medium- and low-credit borrowers. As non-financial information can now also be assessed, loan supply to financially vulnerable groups is expected to become more active.

According to the Korea Federation of Savings Banks on the 1st, an advanced standard CSS will be applied to the savings bank sector starting today. This CSS model was designed to facilitate smooth funding supply for medium- and low-credit borrowers. The development sample group consisted of 1.5 million customers from 31 small and medium-sized savings banks. Data jointly researched with the Korea Deposit Insurance Corporation and the Korea Credit Information Services in May last year was also referenced during development to reduce the risk of multiple debtors.

Non-financial information has also been incorporated into the system. Alternative financial information such as real estate prices, purchase data, and micro-payment information affects the final credit score, making it easier to distinguish thin-file customers (those with insufficient financial history).

Additionally, when handling secured (business) loans, the system evaluates collateral value along with debtor credit assessment to appropriately judge repayment ability.

The Korea Federation of Savings Banks has been conducting an upgrade project for the existing CSS over six months. After a one-month stabilization pilot service, it will be fully applied starting this month. The participating savings banks will begin with 46 institutions and will continue to expand. With CSS now extended to 11 savings banks that previously lacked such a system, the overall screening capability across the sector is expected to strengthen.

A representative from the Korea Federation of Savings Banks stated, "We will strive to establish this as a central evaluation system playing a pivotal role in expanding mid-interest loans and supplying financial services to the common people."

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