"Delinquency Records to Be Deleted for Debts Under 50 Million Won If Repaid in Full by Year-End"
Improved Credit Scores to Help Diligent Repayers Recover Quickly
The government has decided to delete delinquency history records for individuals who have diligently repaid their overdue debts in full since the COVID-19 pandemic, in order to help them recover quickly.
The Financial Services Commission announced on August 11 that it will delete delinquency history records for individuals and sole proprietors who incurred overdue debts of 50 million won or less (for personal and sole proprietor loans) between January 2020 and August this year, provided they repay the full amount by the end of this year.
This measure is intended to support credit recovery for ordinary citizens and small business owners who were inevitably late in repaying their debts due to the economic downturn caused by COVID-19 and high interest rates. If they repay the full amount in good faith, they will be able to return to normal economic activity more quickly.
The Financial Services Commission explained that out of approximately 3.24 million individuals and sole proprietors who incurred small-scale delinquencies between January 1, 2020, and the end of June this year, about 2.72 million have so far repaid their debts in full and are eligible for credit recovery support. The remaining approximately 520,000 individuals may also become eligible for support if they repay their overdue amounts in full by the end of the year.
The Financial Services Commission expects this measure to significantly raise the credit scores of those eligible for credit recovery. Last year, individuals who benefited from credit recovery support policies saw their average credit score increase by 31 points, while sole proprietors experienced an average increase of 101 points.
An official from the Financial Services Commission emphasized, "With this measure, those who have diligently completed their debt repayments are expected to avoid disadvantages in interest rates, credit limits, and new loans due to their improved credit scores."
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