Blocking Credit Information Sharing for Diligent Re-entrepreneurs in Financial Sector... Student Loan Delinquency Grace Period Extended from 2 to 3 Years

From now on, negative credit information such as delinquencies of diligent management re-entrepreneurs will not be shared with financial institutions without a separate application. In addition, the grace period for registering delinquency information on student loan defaults will be extended from up to 2 years after university graduation to up to 3 years.

The Financial Services Commission announced on the 23rd that the revised Enforcement Decree of the "Credit Information Use and Protection Act (Credit Information Act)" containing these provisions was approved at the Cabinet meeting.

First, the revision establishes grounds for the Credit Information Agency to receive diligent management evaluation information and block the sharing of negative credit information of diligent management re-entrepreneurs with financial institutions.

Currently, re-entrepreneurs with a history of business closure face difficulties in financial transactions as negative credit information such as bankruptcy and rehabilitation is shared with financial institutions, causing disadvantages in loan screening. However, going forward, the Credit Information Agency will be able to receive diligent management evaluation information of re-entrepreneurs from the Small and Medium Business Corporation, enabling the blocking of negative credit information of re-entrepreneurs who pass the in-depth diligent management evaluation from being shared with financial institutions.

Since last year, re-entrepreneurs who have passed the in-depth diligent management evaluation will have their negative credit information automatically blocked without a separate application starting from September (tentative), when the IT linkage between the Small and Medium Business Corporation and the Credit Information Agency is completed, resulting in an increase in their credit scores. Accordingly, it is expected that the credit of diligent management re-entrepreneurs will be restored, making it possible to secure private funding such as new bank loans.

Along with this, the financial authorities have extended the grace period for registering delinquency information on student loan defaults for young people starting their social life from up to 2 years after graduation to up to 3 years. This is due to the expansion of employment difficulties for university students caused by changes in the economic environment such as low growth, which delays the time needed for first employment after graduation, resulting in cases where repayment of student loans begins before employment.

Accordingly, the Financial Services Commission, in consultation with the Korea Student Aid Foundation and the Credit Information Agency, has extended the grace period for registering delinquency information on student loan defaults. This measure has been effectively implemented since the 1st of this month by the Credit Information Agency revising the General Credit Information Management Regulations. With this measure, the registration of delinquency information for about 2,000 young people will be deferred, preventing cases where student loan delinquency information is registered from the start of social life and causes disadvantages in economic activities.

Meanwhile, the revision also establishes grounds for financial companies and other information providers to suspend information provision if MyData service providers do not pay information provision fees. In addition, it includes provisions allowing the Credit Information Association to autonomously perform review tasks related to credit information business, debt collection business, and MyData business to protect consumers.

The Financial Services Commission stated, "We will continue to work with related agencies to improve credit information systems, including support for credit recovery."