The Number of Credit Delinquents nearing 3.35 Million in Korea

The number of credit delinquents increased by 120,000 during July this year to exceed a total of 3.34 million in Korea. The increase shown by teens and women is particularly striking.

According to the Korea Federation of Banks (KFB), the number of credit delinquents was the highest ever recorded, at over 3.34 million, as of the end of July after a 3.75% increase from 121,102 in June this year.

One of the reasons for the rapid growth of delinquency is believed to be the fact that surety insurance companies registered those who defaulted on phone bills en masse last month as they strengthened their credit management on mobile phone users. So far, the mobile phone payment delinquents have escaped being categorized as credit delinquents since it was hard for the insurance companies to detect their mailing addresses.

Another reason is that the Korea Asset Management Corporation or KAMCO, which is in the process of buying off customer`s bad debts, recently detected and registered credit delinquents regarding public information services.

The number of credit delinquents, reported by surety insurance companies and KAMCO in July grew by 64,317 and 51,888 respectively.

In particular, the number of credit card delinquents recorded over 2.07 million, a 4.28% increase from a month earlier, which has made the largest contribution to the dramatic rise in credit delinquency in the nation.

By age groups, the credit delinquents who are under 20 grew 6.31% to 6,199, showing the highest growth rate.

Increasing rates of credit delinquents in other age groups are: 3.92% at 660,766 for those in their 20s, 4.35% at 994,300 for those in their 30s, and 3.33% at 1,685,005 for those in their 40s and older.

In the meantime, the growth rates of credit delinquency show higher for women than men in every age group except for teenagers. Among them, women in their 30s show the highest growth rate of 5.79% in credit delinquency, followed by 5.30% for teenage girls, 4.84% for those in their 20s, and 4.28% for those in their 40s and beyond. A source at the KFB said, “Credit delinquency at large is on the decrease, although only slightly, considering extraordinary factors including the recent and concentrated registration of credit delinquents by insurers and KAMCO.”

Chi-Young Shin higgledy@donga.com