Toss Bank First Notified Interest Rate Reduction Rights... Interest Rate Down 5%p, Credit Score Up 379 Points

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[Asia Economy Reporter Minwoo Lee] Customers who received interest rate reduction notifications from Toss Bank experienced a decrease in loan interest rates by about 5% and an increase in credit scores by up to 379 points.

On the 5th, Toss Bank announced that from its launch on October 5 last year until the 31st of last month, the total number of interest rate reduction requests reached 24,910. This is about 40% higher than the average number of interest rate reduction applications (17,809) received from customers by the five major commercial banks over six months at the end of last year. Additionally, more than one in five customers (22%) who applied for an interest rate reduction at Toss Bank received benefits. In particular, among middle to low credit customers, more than two out of five requests (42.4%) were accepted.

Toss Bank attributed this to proactively offering customers the right to request interest rate reductions. A Toss Bank official explained, "Previously, customers had to find hidden options within other banks' applications or inquire through customer centers, and even after applying, they had to submit necessary documents themselves, which was cumbersome. Toss Bank informed customers who agreed in advance about the possibility of credit improvement, even if they were unaware of their credit status, guiding them to apply."

As a result, more than one in three customers (37.5%) who were first notified by Toss Bank about interest rate reductions enjoyed the benefits. Customers whose interest rate reductions were approved experienced a decrease of more than 5 percentage points in their rates. According to Korea Credit Bureau (KCB) standards, credit scores improved by up to 379 points (based on the previous five-grade system), resulting in a 'credit building' effect. Among customers approved for interest rate reductions, one in three (33%) had their requests accepted even though they applied within a week after taking out a new loan.

Especially, middle to low credit customers were able to improve their credit by repaying loans from secondary and tertiary financial institutions, such as cash advances or card loans, after borrowing from Toss Bank.

Meanwhile, customers whose interest rate reduction requests were denied were mainly analyzed to have experienced a drop in credit scores due to reasons such as decreased annual income or taking out additional loans. This included cases where customers took additional loans from secondary and tertiary financial institutions like savings banks and card companies after borrowing from Toss Bank.

A Toss Bank official stated, "For Toss Bank customers, the right to request an interest rate reduction is a right that must be exercised. Toss Bank will consider more ways and proactively propose measures to ensure that customers, as financial consumers, can realize their legitimate rights such as interest rate reductions and credit improvements."

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