Switch to 1~1,000 points instead of 1~10 grade
Prospects to improve loan rejection practices according to grade
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From January 1 of next year, the credit rating system will be completely switched to the credit score system. It is a method of subdividing the credit rating, which was applied uniformly according to the 1-10 grade, into 1 to 1,000 points. The practice of uniformly rejecting loans according to credit ratings is expected to improve. Based on the presentation of the Financial Services Commission and the explanation of the financial sector, the details are summarized in Q&A.
-What is the credit rating system and the score system and what is the difference
▲Currently, the financial sector has rated credit ratings from 1 to 10 based on personal credit information. The lower the number, the better the customer is evaluated. The financial company determines the size of the loan and the level of interest rate based on this credit rating. Unlike the rating system, the credit score system refers to subdividing an individual’s credit rating into 1 to 1,000 points. The closer to 1,000 points, the higher the credit rating.
-What is good if the credit rating system changes to the score system?
▲ The biggest problem with the credit rating system is that the disadvantage is large due to the difference in credit rating. Even if it is above the grade, it is relatively disadvantageous because it is uniformly applied according to the grade when it is subjected to loan review. For example, a borrower with a higher grade 7 is difficult to obtain a loan from a commercial bank because it is grade 7 even if there is only a difference of 1 to 2 points from the lower grade 6. Credit card issuance is also restricted for 7 class car owners. The introduction of a fine-grained scoring system will improve such unreasonable practices and improve access to finance for low-credit groups.
-Where does it apply
▲ The credit score system will be applied to the entire financial sector, including banks, insurance companies, financial investment companies, and credit companies from January 1 of next year. Already, Kookmin, Shinhan, Woori, Hana, and Nonghyup banks have applied it on a pilot basis since January last year.
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-What will be different in financial companies when the score system is introduced?
▲ Currently, many financial companies have provided uniform financial services by receiving credit ratings from CB companies. From now on, only credit scores from CB companies will be provided, and financial companies will conduct their own credit risk assessments, considering risk strategies, etc. For example, in the rating system, if all of the banks A, B, and C were able to lend to borrowers with a grade of 6 or higher, after the introduction of the score system, bank A could borrow 664 points or higher, bank B 660 points or higher, and bank C 655 or higher. Can be operated. The Financial Services Commission explained that financial companies can devise a risk strategy appropriate to their own situation and provide differentiated services for financial consumers.
-How is the credit score system applied in real life other than when receiving a loan?
▲ The criteria for applying credit card issuance and support for low-income financial products are changed from credit rating to personal credit rating. If credit cards are currently issued only to grade 6 or higher, it will change to individuals with 680 points for NICE and 576 points for KCB from next month. Sunshine Loan and other low-income financial products are also eligible for support of 700 points (KCB) or 744 points (NICE) or less for grade 6 or lower, and the credit limit preferential criteria for mid-interest rate loans are 820 points (KCB) and 859 points (NICE ) Or less.
-How do I manage my credit score?
▲ If the credit score is low, a lower limit is applied to the higher interest rate even if the same money is borrowed. If the score is below a certain score, it may be difficult to loan or issue a card in the first financial sector. As in the credit rating system, this is why credit score management is necessary. You can increase your credit score simply by paying communication fees and utility bills in a timely manner. Another way is to pay off the loan interest on time. Even a small amount overdue can lower your credit score.
-Can I check in advance how my credit score will come out?
▲ Prior to the full introduction of the credit score system, a fintech company is operating related services. Viva Republica operates a service that checks new credit scores through the Toss application and even provides customized credit management tips.
Finck recently introduced a service that allows you to increase your credit score in real time using non-financial information. It is a service that submits non-financial information such as communication expenses, national pension and health insurance to CB companies through the PINK app and recalculates the credit score. Kakao Bank is also operating a’credit score increase’ service that recalculates the credit rating by submitting non-financial information that is not included in the credit rating of the CB company.
/ Reporter Kim Ji-young [email protected]
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