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Loan defaulters to receive credit forgiveness

Posted August. 13, 2021 07:36,   

Updated August. 13, 2021 07:36


Individuals and small business owners who defaulted on a loan of less than 20 million won from January 2020 to the end of August 2021 will receive credit forgiveness if they pay back their loans until the end of this year. With their late payments practically erased from credit reports, these delinquent borrowers will not be disadvantaged in taking out loans or getting credit cards.

Some 20 financial institutions, including the Korea Financial Associations and Federations, Korea Credit Information Services, and credit information companies, announced Thursday at a meeting of the Korea Federation of Banks that they signed an agreement to provide a relief to pandemic-stricken businesses and individuals.

The gist of the agreement is to remove delinquency from credit reports for those who fell delinquent on their loans because of the COVID-19 pandemic but paid off their debts in a prudent manner, starting from early October. Even a single late payment can dent an individual’s credit score and result in loan rejection and higher loan interest rates.

Eligible applicants for credit forgiveness are individuals or small business owners who have or had past due debts of less than 20 million won from January. 2020 to Aug. 31, 2021 and paid back in full until the end of this year. Around 2.3 million people are expected to be qualified for credit forgiveness.

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