4.12 Million Restricted in Financial Transactions

It turns out that the financial activities of over 4 million people will be restricted due to credit defaults.

According to financial authorities yesterday, a total 3,825,269 people are considered to be credit defaulters as of the end of February. Also, 298,000 were in default and then removed from the records as of the end of January.

Credit defaulters who are currently out of credit delinquency have their records left in the Korea Federation of Banks’ computers for up to two years at the most. Banks and other financial companies are restricting new loans or credit card issuances to these people by the company’s own regulations.

From this measure, at least 4,123,269 people this year, including both credit defaulters and those who are out of credit delinquency, are not able to conduct normal financial transactions.

The number of credit defaulters is increasing steadily, with 3,720,031 at the end of last year compared with 3,768,305 at the end of January this year. When considering the insolvent debtors adjudicated by the court, more will be restricted from financial transactions.

Credit defaulters totaled 1,335 people at the end of 2002, and have increased every year with the delaying economic recovery and increasing household debts.

One official of a credit rating company said, “Recently, financial companies have been intensifying their management and evaluation of information regarding credit, and those who have loans overdue under two to three months who are just prior to becoming credit defaulter (delinquents with debts of three months or more) are being restricted in their transactions,” showing that much more than the statistical figure are being restricted.

Keuk-In Bae bae2150@donga.com