2.59 Million Low-Income and Small Business Borrowers with Small Arrears to Begin Credit Recovery from March

Starting from mid-March, low-income earners and small business owners who have fully repaid overdue amounts under 20 million KRW that occurred during the COVID-19 pandemic and high-interest rate period will be eligible for credit recovery support. Approximately 390,000 debtors who have not yet repaid their overdue debts can also restore their credit if they fully repay by the end of May.

The Financial Services Commission announced on the 6th that from March 12 (tentative), about 2.59 million low-income earners and small business owners who had overdue small amounts of up to 20 million KRW between September 1, 2021, and January 31 of this year and have fully repaid will receive credit recovery support.

According to the authorities, approximately 2.98 million people incurred small overdue amounts during the period (based on NICE loan data), and about 2.59 million of them have fully repaid their overdue amounts. These individuals can receive credit recovery support without a separate application.

This credit recovery measure is scheduled to be tentatively implemented on March 12. From that date, low-income earners and small business owners can check whether they are eligible for support through the websites of personal credit evaluation companies and personal business credit evaluation companies.

Those who qualify will have their overdue history information excluded from credit evaluations, resulting in an automatic increase in their credit scores. Consequently, financial accessibility such as credit card issuance and new loans will be significantly improved.

Approximately 390,000 overdue debtors who have not yet repaid their debts can also receive credit recovery support if they fully repay by May 31. An official from the authorities stated, "We will continuously monitor the progress with related organizations and actively support preparations to ensure the smooth implementation of the credit recovery support plan."

Meanwhile, the authorities are also promoting a reduction in the registration period for debt adjustment information for borrowers using debt adjustment. This is because when low-income earners and small business owners use debt adjustment through the Credit Counseling & Recovery Service or the New Start Fund, the debt adjustment usage information is registered with the Credit Information Center, which acts as a constraint on financial transactions and adversely affects borrowers.

Accordingly, the authorities plan to improve the system to shorten the faithful repayment period required to lift the registration of debt adjustment information from the current two years to one year starting in March. To this end, the authorities will continue consultations with the Credit Information Center, the Credit Counseling & Recovery Service, and the New Start Fund.

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