what is government credit repair assistance?

starting December 30, financial authorities are launching a massive credit repair effort to remove delinquencies from the records of good repayers. this policy will give people who have experienced delinquencies due to post-COVID-19 economic difficulties, but have been diligent in their repayments, a chance at a new financial life.

this measure goes beyond simply deleting delinquent records and aims to actually improve financial lives. by removing delinquent credit information from your credit report, you will be able to free yourself from the financial disadvantages you have been facing due to your history of late payments.

previous credit repair efforts

the government ran similar credit repair programs in 2021 and 2024. The 2024 program saw beneficiaries' credit scores increase by an average of 31 points. That's more than just a number - nearly 26,000 people got new credit cards and 113,000 people were able to get a first-tier loan.

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3 key requirements

to be eligible for credit repair assistance, you must meet all three of the following conditions.

first, the delinquency must have occurred between January 1, 2020 and August 31, 2024; second, the amount of the delinquency must be 50 million won or less; and third, the delinquency must be repaid in full by December 31, 2024.

the overdue amount is based on the amount registered with a credit bureau or credit reporting agency. Not only individuals but also sole proprietors are eligible, so if you own a business, please check it out.

current eligibility status

as of the end of June 2024, there are approximately 3.24 million people who meet the above criteria. Of these, 2.72 million have already made payments and are automatically eligible for assistance. the remaining 520,000 have time until the end of the year to repay in full and qualify for assistance.

for those who have not yet paid in full, we encourage you to make a repayment plan as soon as possible. missing this opportunity, especially if you have small delinquencies, could limit your financial freedom for years to come.

what happens after you remove your delinquency history

your credit score improves

the first thing you'll notice when your delinquency history is removed is an improvement in your credit score. your credit score will naturally recover as delinquencies are no longer reflected in your credit report. real-world data shows an average increase of 31 points, with some people seeing an increase of more than 50 points.

increased access to financial services

people who were previously denied credit cards are now able to get them. they can enjoy a variety of card benefits without the inconvenience of using only a debit card. In addition, people who used to use secondary financial institutions or lenders can get loans from primary financial institutions, significantly reducing the interest rate burden.

increase your credit limit. if you've had your credit limit limited due to a history of late payments, you'll be able to apply for an increase. if you're a business owner, an increased working capital line of credit can help you expand your business.

real-life benefit examples

for Mr. A, a self-employed business owner

mr. A, who owns a cafe, was three months behind on a loan of KRW 30 million due to a sharp drop in sales due to COVID-19. He has since recovered and paid it back in full, but his history of late payments has prevented him from borrowing more. with credit repair support in 2024, his credit score increased by 35 points, and he was able to borrow KRW 50 million in operating funds from a major financial institution at an interest rate of 4.5% per annum.

case of Mr. B, an employee

when he was a new employee, Mr. B paid 2 million won in credit card bills two months late due to lack of living expenses, and although he has since repaid them faithfully, he was denied credit cards for five years. with credit repair support, he was able to get a credit card from a major card company and switch from a second-tier to a first-tier loan.

case of Mr. C, a sole proprietor

mr. C, who runs an online shopping mall, was four months overdue for $15 million in customer receivables. Even after making full repayment, he was only able to borrow at high interest rates due to his low credit rating. This action improved his credit score by 42 points and lowered the interest rate on his business loan from 8% to 5% per annum.

frequently asked questions (FAQs)

Q: Will I not benefit at all if my past due amount exceeds $50,000?

A: Yes, unfortunately, this government support is only available to those who are 50 million won or less in arrears. however, you can still go through the normal credit repair process, so please contact the Credit Repair Committee or the Financial Supervisory Service.

Q: What happens if I don't repay in full by December 31?

A: If you don't pay in full by December 31, 2024, you won't be eligible for this credit repair effort. delinquency records are typically kept for five years after repayment, so it's important to make a repayment plan as soon as possible.

Q: Will I be able to borrow as soon as my delinquency history is removed?

A: Delinquency history removal begins on December 30th. after that, it may take a few days for the credit bureaus to update your information, so we recommend that you wait until mid-January before attempting any financial transactions.

Q: Will my bankruptcy or bankruptcy history be removed?

A: No. This only applies to those who have paid off past due debts of $50,000 or less in full. records related to personal recovery or bankruptcy are subject to a separate legal process.

Q: Do I need to apply for delinquency deletion separately?

A: You don't need to apply separately; it will be processed automatically if you meet the conditions. however, we recommend that you check your credit report with a credit bureau or credit reporting agency after the process is complete.

wrapping up

the government's credit repair assistance for good borrowers isn't just a bailout, it's a fresh start. by removing delinquencies, your credit score will be restored and you'll be able to access financial services that were previously restricted.

for the 520,000 eligible individuals who have yet to complete their repayments, we urge you to take advantage of the remaining time before the end of the year to make sure they are paid in full. missing this opportunity could disrupt your financial life for years to come.

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