For those of the common people or small business owners who are unable to repay their increased debt due to the special situation of COVID-19 and who are willing to overcome this problem, the government has announced a credit amnesty for small delinquents. We would like to inform you about those eligible for the amnesty and how to apply.
penniless and credit card illustration
Find out about credit forgiveness for small delinquent borrowers
In Korea, if an amount exceeding 1 million won is delinquent for more than 90 days, the person is classified as a credit defaulter and the information is kept by a credit rating agency and shared with the financial sector.
In addition, even if you repay all of the delinquent amount, the delinquency history is not immediately deleted and is kept for up to 5 years.
Credit amnesty is sometimes expressed as credit recovery as it immediately erases the default records of people who repay their debts within a certain period of time, that is, their delinquency records, allowing them to engage in normal financial activities.
After the COVID-19 pandemic, many people face an economic crisis such as losing their jobs or closing their businesses, so they take out loans. When they are unable to repay these loans, they are registered as delinquents and increasingly have to use secondary financial institutions with high interest rates. It was a vicious cycle of increasing difficulty.
It is expected that about 2.9 million people will benefit from this credit amnesty.
Those eligible for credit amnesty
Debt period: September 2021 – January 2024
Debt amount overdue is 20 million won or less
Credit amnesty conditions Full repayment by the end of May 24
Expected effects after credit pardon
If you receive a credit pardon, your delinquency history will not be shared with financial companies and will not be reflected in your credit evaluation.
Additionally, as your credit score increases, you will be able to get loans from banks rather than second-tier financial institutions with high interest rates, and you will be able to get credit cards.
Delete overdue information from early March
Average credit score expected to increase by 39 points
Expected to issue credit cards to 150,000 people
Bank loans expected to be available for 250,000 people
It is expected that low-interest loan products will be available.
How to apply for credit pardon
There is currently no separate application method.
If a person who meets the eligibility conditions repays the full amount by the end of May this year, it is expected that he or she will automatically apply and be granted credit forgiveness.
To check whether you are eligible for credit amnesty, you can check in the credit amnesty related system that will be implemented from March 2024.
We will update as soon as the credit amnesty related system is established and a separate application or support method is released.
In conclusion,
There are voices questioning whether this is reverse discrimination against those who have been faithfully repaying their debt while living without a living, and 20 million won is a considerable amount of money, but if they had the ability to repay it all within a short period of time such as the end of May, they wonder why they would have defaulted in the first place.
First of all, the government said it was created as a measure for the common people, so I hope that many people will benefit from this policy.
The above was a guide to credit forgiveness.