Nearly a half of local lenders’ borrowers have received the top credit rating as their ability to repay interest improved under the ultra-low interest rate environment, data showed Monday.
As of end-September, 3.11 million, or 48 percent of the 6.46 million individual customers who borrowed money on credit were found to have received top score of the 10-level credit assessment system, according to Rep. Yoon Du-hyeon, citing data from credit rating firm NICE Credit Information Service.
The number of borrowers with the top credit score was up 8 percentage points from 2016, when the figure stood at 40 percent.
“We have yet to conclude what exactly increased the number of borrowers with high-level credit ratings. It seems that people’s credit scores have recently been elevated as a whole,” NICE said.
In fact, approximately 80 percent of bank customers were on the upper three credit rating scales, with those loan recipents taking second and third grade, accounting for 17 percent and 13 percent of the total bank loan users, respectively, data showed.
The lawmaker pointed out that the current low rates have reduced debtors’ financial burden on interest rate repayment and subsequently raised their credit ratings.
Earlier last week, the Bank of Korea froze its key interest rate at a record low of 0.5 percent amid heightened economic fallout from the protracted coronavirus crisis. The base rate sharply plunged from the 1.75 percent imposed in 2018. Also, the COFIX, a benchmark lending rate for mortgage loans, has slided to 0.88 percent this year after it hit a record high of 2.04 percent last year, data showed.
By Choi Jae-hee (firstname.lastname@example.org