[Ark of the Lowest Credit]② 2030 Youth Reaching Out to the Government for Help

Notable Increase in Young Multiple Debtors
Youths Turning to Policy Finance
35% of Small Livelihood Loans Taken by Those Under 30

On the 27th, citizens visiting the Jung-gu Central Microfinance Integrated Support Center in Seoul applied for loans from a small living expense loan product offering up to 1 million won with an annual interest rate of up to 15.9%. Photo by Jinhyung Kang aymsdream@

Park Sora (32), who worked in an office position at a private clinic for two and a half years, lost her unemployment benefits last December. However, she has not been able to find a job since then. "I had to quit my job because I worked on weekends and holidays and had many miscellaneous tasks, but it's difficult to find reemployment. I have been borrowing money to cover living expenses, so my debt has only increased, and now I am looking into government-supported loans as a friend suggested."

Notably Increasing Number of Multiple Debtors Under 30

On the 10th, Kim Seong-ju, a member of the Democratic Party of Korea, received data from the Bank of Korea on the "Proportion of Household Loans by Age Group for Multiple Debtors (those with loans from three or more financial institutions)." According to the data, the proportion of multiple debtors under 30 has noticeably increased. As of the fourth quarter of last year, the share of multiple debtors under 30 was 27% (loan amount 157.4 trillion KRW), up 2 percentage points from 25.1% (142.5 trillion KRW) in the first quarter of 2021.

During the same period, the proportion of those in their 40s decreased slightly from 33.2% (188.9 trillion KRW) to 32.9% (192.1 trillion KRW), and those in their 50s dropped from 29.3% (166.4 trillion KRW) to 27.4% (160.1 trillion KRW). The 60 and older group saw a slight increase from 12.4% (70.4 trillion KRW) to 12.7% (74.2 trillion KRW).

The Bank of Korea classifies borrowers who are multiple debtors and either middle-to-low income (bottom 30% income) or low credit (credit score 664 or below) as vulnerable borrowers. The increase in multiple debtors under 30 means that the proportion of young people under 30 among vulnerable borrowers accessing policy financial products is also rising.

Highest Proportion of Small Livelihood Loans Among Those Under 30

This is evident from the status of small livelihood loans. According to data received by Choi Seung-jae, a member of the People Power Party, from the Korea Inclusive Finance Agency, there were a total of 25,399 pre-reservation applications from the 22nd to the 24th of last month. Among these, 17,269 applications submitted via web and app recorded age groups, with those under 30 accounting for 6,068 cases, or 35.2%. Those in their 40s accounted for 31.1% (5,379 cases), and those in their 50s made up 22% (3,792 cases). The average loan amount for small livelihood loan applicants was 640,000 KRW.

The Korea Inclusive Finance Agency shared a case: "Among small livelihood loan borrowers, there was a young person preparing for a civil service exam who applied for a 1 million KRW small livelihood loan due to lack of funds to pay for online lecture fees, providing proof of study expenses. In a single-parent family, the mother was physically unwell, and the applicant was a job seeker with no monthly income, using credit card cash services and revolving credit, which led to high interest rates and even delinquency. However, since repayment of principal and interest was difficult, we connected them to debt adjustment counseling."