'Credit Amnesty' Benefits 2.868 Million People...Individuals' Scores Increased by 31 Points, Sole Proprietors by 101 Points

As a result of a large-scale credit pardon promoted by financial authorities, the credit scores of approximately 2,868,000 individuals and sole proprietors with small overdue debts have improved. It was found that individuals’ credit scores increased by an average of 31 points, while sole proprietors’ scores rose by an average of 101 points.

The Financial Services Commission announced on the 16th that among 2,984,000 individuals and 310,000 sole proprietors who had small overdue amounts (under 20 million KRW) from September 2021 to the end of January this year, 2,665,000 individuals and 203,000 sole proprietors had fully repaid their overdue amounts and received credit recovery benefits by the end of last month.

The age distribution of individuals who received credit recovery support showed that those in their 40s accounted for 22.7%, those aged 60 and above 21.2%, and those in their 30s 21.1%. Among sole proprietors, the largest industry share was wholesale and retail trade at 30.0%, followed by accommodation and food services at 25.8%, and repair and other service industries at 11.0%, indicating that many benefits were mainly received by small neighborhood businesses.

For individuals, the credit scores of approximately 2,665,000 who completed full repayment increased by an average of 31 points (from 653 to 684). Notably, those aged 20 and under saw an increase of 40 points, and those in their 30s saw a 32-point rise. Authorities analyzed that this measure provided greater support for young adults and those starting their careers.

Due to the credit recovery measures, individuals whose credit scores improved were able to change their existing loans to better interest rate conditions or increase their credit card limits, and were also able to obtain new credit cards or new loans. As a result, by the end of last month, about 26,000 people received credit card issuance, and about 113,000 obtained new loans from first-tier financial institutions.

For sole proprietors, the credit scores of approximately 203,000 who completed full repayment increased by an average of about 101 points (from 624 to 725). By industry, the credit score increases were 104 points for manufacturing, 100 points for wholesale and retail trade and accommodation and food services, and 99 points for repair and other service industries, showing that similar credit recovery benefits were provided across all industries.

Accordingly, by the end of last month, about 8,000 people received sole proprietor loans from first-tier financial institutions, and it is expected that many small business owners and self-employed individuals will be able to enter into new financial transactions or change their existing financial products to more favorable conditions in the future.

The Financial Services Commission stated, “We plan to continue policy support to improve financial accessibility for low-income earners and small business owners struggling with high interest rates and inflation, including promptly promoting amendments to the Enforcement Decree of the Credit Information Act to restrict the sharing of disadvantageous credit information such as bankruptcy information with financial institutions for diligent management and re-entrepreneurs.”