"Does Frequent Checking Lower Your Score?" The Worst Habit in Credit Management Is 'This'

Checking Your Credit Score Does Not Lower It

Inquiry History No Longer Affects Your Score After 2011

Experts Identify This as the Worst Habit

On financial applications such as Toss or KakaoBank, users can easily check their personal credit scores by clicking 'View My Credit Score.' Since this score affects loan eligibility, interest rates, credit limits, and credit card issuance reviews, it receives significant attention from consumers.

Individual credit scores are calculated based on each person's credit information and range from 1 to 1000 points. Since the existing credit rating system was abolished in January 2021 and replaced with a score-based system, personal creditworthiness is now evaluated in score units. The Asia Business Daily

However, after checking, it is not uncommon to find that scores differ by dozens of points depending on the credit rating agency. For this reason, on May 18, Yonhap News conducted a fact-check regarding credit scores.

A Credit Score Quantifies 'Delinquency Risk'

Individual credit scores are calculated based on each person's credit information, ranging from 1 to 1000 points. Since the existing credit rating system was abolished in January 2021 and replaced with a score-based system, personal creditworthiness is now evaluated in score units. A credit score statistically indicates the likelihood of a long-term delinquency of 90 days or more within the next year. Closer to 1000 points means a customer is considered low-risk and highly creditworthy. The leading personal credit rating agencies are NICE Information Service and Korea Credit Bureau (KCB). These companies calculate scores by collecting data on loans, credit card usage, overdue payments, repayment history, and non-financial payment records, then provide this information to financial institutions.

Banks and credit card companies refer to this score to determine whether to approve loans, set interest rates and limits, and issue cards. However, financial institutions do not use the CB score as-is; they also apply their own internal evaluation criteria.

Why Are NICE and KCB Scores Different?

On online communities, questions such as "Why are the NICE and KCB scores different for the same person?" and "Which score is correct?" are often raised. In conclusion, since each credit rating company (CB) has different evaluation criteria and weighting, the scores can differ for the same individual.

The main reason credit scores differ between agencies is due to the weight assigned to each evaluation item. NICE currently evaluates based on delinquency status, past debt repayment history, debt burden, credit transaction period, credit card usage patterns, and non-financial/MyData information. Among these, repayment history, debt burden, and credit transaction patterns carry the greatest weight.

A personal credit loan interest rate notice is posted at a commercial bank in Seoul. Photo by Kang Jin-hyung

KCB also incorporates repayment history, debt level, credit transaction period, credit transaction type, and non-financial/MyData information. However, for general customers, the credit transaction type is given relatively more importance. Simply put, NICE tends to focus more on delinquency status and repayment history, while KCB places greater emphasis on the method of credit transactions. As a result, even for the same individual, one agency may rate them in the 900-point range while the other may rate them in the 850-point range.

Additionally, identical criteria are not uniformly applied to everyone. For people with a history of long-term delinquency, repayment history may be given more weight.

For young adults starting their careers, credit scores often begin around 700 points. In the financial sector, a score of 850 to 900 or above is generally considered high credit. Experts explain that, especially at primary financial institutions, a score of at least 850, preferably around 900, is required to smoothly obtain credit loans. The lower the score, the greater the likelihood that loan limits will decrease and interest rates will rise.

A Credit Score of 850–900 or Above Means 'High Creditworthiness'

Recently, the proportion of high-credit individuals has been increasing. As awareness of credit scores grows and managing scores via financial apps becomes easier, more people now hold scores above 900. However, a credit score is not a relative evaluation but a measure of an individual’s probability of delinquency. Even if the number of people with scores above 900 increases, it does not directly make other people’s scores less favorable.

The biggest reason why credit scores vary between rating agencies is because the weights assigned to each evaluation criterion differ. Screenshot from All Credit website.

The most important aspect to consider in managing your credit score is how you use loans. Even if you borrow the same amount, obtaining a loan from a primary financial institution such as a commercial bank may affect your score differently than borrowing from secondary financial institutions such as savings banks, credit unions, or mutual savings banks. Generally, loans from secondary financial institutions are more likely to cause a greater drop in your score.

The number of loans you have is also significant. It may be more advantageous for your score to manage the required amount with a single financial institution rather than splitting small loans across multiple companies. The financial sector considers not only the total loan amount but also the number of loans, financial institutions used, and repayment history.

As the loan approval criteria tighten at primary financial institutions such as banks amid the economic downturn, the scale of card loans and cash services is increasing. The photo shows advertisements related to card loans posted on Myeongdong Street in Jung-gu, Seoul. Photo by Kang Jinhyung

Although some claim that having multiple credit cards lowers your credit score, simply having several cards does not directly cause your score to drop. What matters is avoiding late payments and maintaining your spending at a reasonable level relative to your credit limit. Experts advise keeping your credit card utilization below 40–50% of your total limit to manage your score effectively. For example, if your credit limit is set too low and you use an amount close to your limit every month, financial institutions may view you as "someone who always maxes out their limit." In this case, even if your total card spending is not high, it may negatively impact your credit evaluation.

The same applies to overdraft accounts. It's important to manage them so that utilization does not get too high relative to the limit. Consistently using both debit and credit cards can also help. If you maintain sound financial transactions over a long period, it can be positively evaluated in terms of credit transaction duration and usage patterns.

Delinquency Is the Worst—Avoid Even Small Overdue Payments

The most critical factor affecting your credit score is delinquency. Failing to pay your credit card bills, loan principal and interest, or other charges on time can cause your score to drop. If you are overdue for more than five business days and the amount is at least 100,000 won, this overdue information is reported to credit rating agencies. Even if you repay the overdue amount later, the record remains for a certain period. If you are overdue by more than 100,000 won for over five business days, the information is shared for one year. If this situation occurs more than twice within five years, the sharing period can be extended to three years. Long-term delinquency, such as being overdue for more than 1 million won for over three months, is recorded for up to five years.

Experts identify the most basic methods to improve credit scores as ▲avoiding even small payment delinquencies ▲reducing the number of loans ▲managing credit card usage relative to limits ▲refraining from cash advances, revolving credit, and card loans ▲submitting non-financial payment records. KakaoBank

Delinquency on national taxes, local taxes, fines, and customs duties can also impact your credit evaluation. The first principle of credit score management is to avoid overdue payments, even small ones.

Revolving credit, cash advances, and card loans can negatively affect your credit score. In particular, cash advances may be interpreted as a sign of short-term cash flow issues, resulting in a greater drop in your score.

If you use installment financing from a capital company to buy a car, you should be cautious. Installment financing for used cars, in particular, can have a greater impact on your credit score. On the other hand, submitting non-financial payment history—such as National Pension, health insurance premiums, communication fees, and utility bills—to credit rating agencies can help raise your score. The 'Improve Credit Score' function provided by financial apps is an example of this. Linking MyData or submitting a record of timely payments may result in a short-term increase in your score.

Checking Your Credit Score Will Not Lower It

Checking your credit score does not lower your score. The claim that your score drops if you check it frequently is not true as of now. In the past, inquiry history did affect your score, but since a policy change in October 2011, simple inquiries are no longer reflected as a negative factor. You can check your credit score free of charge on sites such as All Credit, NICE Jikimi, and Siren24, and you can check it as many times as you wish via financial apps.

Experts identify the most basic methods to improve credit scores as ▲avoiding even small payment delinquencies ▲reducing the number of loans ▲managing credit card usage relative to limits ▲refraining from cash advances, revolving credit, and card loans ▲submitting non-financial payment records. Ultimately, credit score management is less about techniques to quickly boost your score, and more about the habit of repaying on time and avoiding excessive credit transactions. There is no need to be alarmed if your NICE and KCB scores differ. Both scores should be seen as reference indicators, and it is important to check the reasons for fluctuations provided by each agency and manage your score consistently.

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