Shinbo Develops Korea's First Commercial Credit Index... Launches 300 Billion Won Guarantee Product

[Asia Economy Reporter Ki Ha-young] The Korea Credit Guarantee Fund announced on the 4th that it has completed the development of a Commercial Credit Index (Korean-style Paydex) to actively support the government's innovative financial policies and will launch a dedicated guarantee product utilizing this index.

The Commercial Credit Index is an innovative credit evaluation index that departs from the traditional credit evaluation method based on financial statements, using timely dynamic information to identify and support companies with good payment ability and commercial creditworthiness.

As part of the 'Innovative Finance Promotion Direction' jointly announced by related ministries in March last year, the Korea Credit Guarantee Fund has been promoting the introduction of the Commercial Credit Index. On March 18, it obtained a credit inquiry business license from the Financial Services Commission to smoothly carry out big data-based projects, establishing a legal foundation for the introduction of the Commercial Credit Index.

The Korea Credit Guarantee Fund has completed the development of the Commercial Credit Index composed of a total of 10 grades and launched a dedicated guarantee product worth 300 billion KRW linked to this index.

The dedicated guarantee product operates with a maximum limit of 300 million KRW per company. This product allows companies that had difficulty obtaining guarantees due to low credit ratings under the existing evaluation system to receive guarantee support if their Commercial Credit Index is excellent.

In particular, the Korea Credit Guarantee Fund offers preferential benefits such as a guarantee ratio of 90% and a reduction of 0.3 percentage points in the guarantee fee rate to alleviate the financial burden on companies with excellent Commercial Credit Index scores.

Yoon Dae-hee, Chairman of the Korea Credit Guarantee Fund, said, “We expect that the dedicated guarantee product will improve financial accessibility for small and medium-sized enterprises that were in financial blind spots,” adding, “We will actively collaborate with financial companies and corporate credit rating agencies (CB) to ensure that practical benefits reach companies struggling due to COVID-19.”