The current credit rating system relies primarily on financial records, including loans, card usage, and overdue charges. (image: Korea Bizwire)
SEOUL, Apr. 3 (Korea Bizwire) — Homemakers, university graduates, and other financially vulnerable groups will be able to qualify for loans more easily if they have been paying for their mobile plans diligently.
The Financial Supervisory Service (FSS) announced on Tuesday that five major banks in South Korea will consider mobile payments and non-financial information to reassess credit ratings of financial consumers, starting in the second half of this year.
The current credit rating system relies primarily on financial records, including loans, card usage, and overdue charges.
Recent graduates, housewives, and seniors without any record of credit card usage in the previous two years or borrowing in the previous three years have been classified as thin fliers, receiving lower credit ratings.
Their ratings have been too low to borrow from banks, so they had to resort to non-bank financial institutions to get loans at higher interest.
To resolve the issue, the FSS has set out to consider non-financial information, including mobile plans, mobile purchases, and online transactions, to reassess the credit ratings of financially vulnerable groups.
The new policy will allow as many as 200,000 individuals with credit ratings of level 7 or 8 to be approved for loans at banks.
Financial authorities plan to introduce non-financial information credit ratings agencies and apply big data-based technologies to develop new credit rating models.
H. M. Kang (hmkang@koreabizwire.com)
