신용사면 대상자 Credit amnesty for 2.9 million people begins next month... Concerns about credit system distortion ↑

신용사면 대상자Credit recovery support will be implemented starting next month… Delete up to 2.98 million delinquent records
Reverse discrimination against faithful repayers and credit score reliability issues raised

[anchor]
Last month, the government and the ruling party announced that they would implement a ‘credit amnesty’ for ordinary people and small business owners. Financial authorities presented a detailed plan today (6th). It is expected that credit will be restored for up to 2.98 million people starting next month, but concerns are high about credit inflation and increased risk. This is reporter Lee Yuna.

[reporter]
Starting from the 12th of next month, the government will implement credit recovery support measures to delete delinquent records.
The purpose is to provide a chance for recovery to delinquent borrowers who have had a history of delinquent payments due to failure to repay loans or credit card payments on time and have had difficulty engaging in normal financial activities.
If you repay all arrears of less than 20 million won from September 2021 to last month by May, you will be eligible for credit forgiveness.
The financial authorities calculated the number of people who have already repaid in full at 2.59 million, and announced that if up to 390,000 people repay their delinquent amounts, up to 2.98 million people would be eligible for benefits.
Starting March 12, you can check whether you are eligible for support on the websites of personal credit rating agencies and individual business credit rating companies.
The authorities expect that through credit amnesty, credit scores based on Nice Rating Information will increase by an average of 39 points.
In addition, it is expected that 150,000 people will meet the minimum credit score of 645 points, which is the current card issuance standard, and 250,000 people will meet the credit score of 863 points, which is the qualification requirement for new loans from banks, which is expected to improve access to loans for the financially vulnerable. .
However, some are raising concerns about the side effects of credit forgiveness.
This can lead to reverse discrimination against faithful repayers and damage the reliability of existing credit scores.
There is an opinion that the increased credit score through credit amnesty may distort the credit rating system of financial companies and further lead to increased risk burden in the financial sector.
For this reason, the past government took a cautious approach to credit amnesty, and it has only been implemented three times: in 1999, 2013, and 2021.
Above all, the problem is that an increase in credit score does not actually increase the borrower’s ability to repay.
The arrears of self-employed people who are unable to withstand the COVID-19 crisis, high interest rates, and high inflation, and are even having difficulty obtaining loans, are increasing explosively.
Last year, delinquency for self-employed people with multiple debtors reached 13 trillion won, the highest ever, increasing 2.5 times in one year.
The prevailing opinion is that government-led credit amnesty is only a temporary increase in credit scores and that supplementary measures should be included because it is likely to lead to increased delinquency rates and difficulties in debt management in the long term.
This is Lee Yuna of Seoul Economic TV. / yalee@sedaily.com

[Video Editing: Garam Kim]

[ⓒ Seoul Economic Daily TV (www.sentv.co.kr), unauthorized reproduction and redistribution prohibited]
#Tag
See all reporters

Reporter Lee Yuna
finance department

yalee@sedaily.com
02) 3153-2610

To subscribe to this reporter’s articles, please click the subscribe button.

Related news
Credit pardon for 2.9 million people… Financial sector: “Credit score reliability is lost”
Please log in with your preferred social account and write a comment.

0/250

live broadcast
PD Choi Min-ho
Lee Jeong-won MC

live broadcast
PD Park Sol-ah
Choi Yoo-jeong MC

live broadcast
PD Lee Sang-in
Jaeyoon Yoon MC

live broadcast
Baek Min-hee PD
SEN MC

live broadcast
PD Park A-in
MC Seo Ji-an

Sangam-dong, Mapo-gu 12.0℃

Precipitation probability
60%

SEN Seoul Economic TV, B1, 3, 4, 8, 9th floor, Seoul Economic Promotion Agency, 400 World Cupbuk-ro, Mapo-gu, Seoul
16th floor, Bi-dong, Twin Tree Building, 6 Yulgok-ro, Jongno-gu, Seoul (Junghak-dong)
Title: SEN Seoul Economic TV
Registration number: Seoul, A52887
Registration date: February 19, 2020
Publisher and Editor: Lee Sang-seok
Publication date: October 10, 2008
Youth protection officer: Park Jin-gwan
Main office and issuing office phone number: 02-3153-2605
Customer Center: 1577-7451
Business registration number: 107-81-84028
Mail order business report number: 2018-Seoul Jongno-0855
Representative Name: Lee Sang-seok
Copyright 2012 ⓒ Seoul Economy TV Corp. All Rights Reserved.

ON AIR
pairing

Please log in with your preferred social account and write a comment.