The government and the ruling People Power Party (PPP) agreed on Thursday to expunge records of overdue loan repayments for small business owners and those in vulnerable groups if they repay all of their debts by May.
The “credit pardons” will be granted to individuals with 20 million won ($15,235) or less in debt from September 2021 to January, mostly whose repayments were delayed due to the impact of the COVID-19 pandemic. It is expected to benefit up to 2.9 million people.
“Deleting records of overdue loan repayments will elevate credit scores, making it possible for individuals to resume normal financial activities, such as receiving credit cards or taking out new loans,” Rep. Yoo Ui-dong, the PPP’s chief policymaker, told reporters.
The government announced it will sign agreements with banks and other financial institutions by early next week, allowing potential beneficiaries to benefit from the decision as soon as possible.
Credit rating agencies keep records of debts that are overdue by three or more months and share them with financial organizations, utilizing such records for up to five years, even after debts are fully repaid. (Yonhap)