One in Four Koreans Is a 'Thin Filer'... Credit Scores in the 700s Despite Income

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] It has been identified that one in four Koreans is a "thin filer" (someone with insufficient financial transaction history). This means that a significant portion of the population, despite having stable income, finds it difficult to obtain loans or must borrow money at high interest rates due to a lack of transaction records.

According to data submitted by NICE Information Service, a credit rating agency, to Min Hyung-bae, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the total number of thin filers in the first half of this year was 12,807,275. This accounts for 27.1% of the 47,307,806 individuals subject to credit rating. NICE classifies individuals as thin filers if they have no credit card usage records in the past two years and no loan experience within the last three years.

Korea Credit Bureau (KCB), which also classifies those without credit card or loan records for three years as thin filers, reported 11,942,503 people, representing 24.7% of the total 48,261,439 individuals.

More than half of the thin filers were young adults in their 20s and seniors aged 60 and above. According to NICE, there were 3,227,319 people in their 20s and 4,179,087 aged 60 or older. KCB also reported 3,121,297 and 3,626,386 respectively, making up more than half.

The credit scores of those with insufficient financial history often remained in the 700 range. Scores in the 700s typically indicate difficulty borrowing from commercial banks or having to pay high interest rates. Among the thin filers classified by NICE, 9,554,831 (74.6%) had credit scores between 700 and 800. Those in the 300 range accounted for 4.3% (545,595 people), and the 600 range was relatively minimal at 35,316 people (0.3%). Scores in the 200 to 500 range were only in the dozens or hundreds.

From the thin filers' perspective, despite having income or repayment ability, their low financial transaction history results in unfavorable loan conditions. In response, credit rating agencies are currently preparing supplementary measures such as awarding additional points based on mobile phone bill payments or utility bill payment records.

Recently, internet-only banks, online-linked financial investment industries, and fintech companies have been accelerating efforts to develop or enhance credit evaluation models (CSS) for thin filers.