K-Bank, Creator of CSS for Medium and Low Credit Borrowers, Sees 1 in 5 Borrowers' Credit Scores Increase

Earlier this year, Mr. A, who took out a loan from K-Bank, was a low-credit borrower with a credit score in the 600s and three loans totaling 80 million KRW from savings banks. However, with the newly applied specialized CSS, he was able to secure the loan. The loan from K-Bank was used to repay the debts at the savings banks. As a result, his credit score increased by more than 200 points, making him a high-credit borrower.

It was found that one out of five customers who used K-Bank’s specialized credit scoring model (CSS) benefited from an increase in their credit score.

According to K-Bank on the 19th, since mid-February when the specialized CSS was applied, 21% of customers saw their credit scores increase (as of the end of last month). The average credit score rose by 32 points, with the highest increase being 207 points.

K-Bank developed the specialized CSS in February to reflect the characteristics of mid-to-low credit borrowers and thin-file borrowers (those with insufficient financial history). The new CSS is characterized by combining pseudonymized telecommunications and shopping data with financial information.

K-Bank analyzed that the credit score improvements were made possible through repayment of loans from secondary financial institutions. Borrowers whose credit scores increased repaid about 31% of their existing non-bank loan amounts. This means that loans obtained through the specialized CSS were used to pay off existing secondary financial institution loans.

Since the application of the specialized CSS, the loan amount for thin-file borrowers has also increased. The loan amount for thin-file borrowers rose from 10.5 billion KRW before the new CSS was applied to 37.3 billion KRW, an increase of about 3.5 times.

A K-Bank official explained, “It is understood that the number of customers whose credit scores have improved or who have reduced their interest burdens has increased since the application of the specialized CSS.”

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