Young Koreans with bad credit surge

The number of young South Koreans with delinquent loans has rapidly increased in the past three years, data by the state-run financial watchdog showed Monday.

As of July, 65,887 people in their 20s have been registered at the Korea Credit Information Services as "delinquent borrowers," referring to people who are disadvantaged in financial transactions due to long-standing credit card or bank debt. This figure marked a 25.3 percent increase from the 52,580 delinquent borrowers in the same age group in 2021, according to the Financial Supervisory Service data submitted to Rep. Lee Kang-il of the main opposition Democratic Party of Korea.

The total number of people of all ages with bad credit increased from 548,730 to 592,567 in the same period, marking an 8 percent increase, which is substantially lower than the jump witnessed among 20-somethings.

People who did not pay back their credit card debt or bank loan for at least three months, or failed to pay a minimum of 5 million won ($3,700) in taxes for at least a year are registered as delinquent borrowers. They are subject to a number of disadvantages, including restrictions on getting a loan, getting their credit card suspended and having their credit rating readjusted.

The FSS data showed that 33,610 of these young delinquent borrowers had failed to pay back bank loans, while 22,356 had loans from nonbank financial companies that have bank functions but are not regulated by banking law. Another 16,083 had debt from companies categorized as specialized credit finance businesses, which include credit card companies.

The increase in the number of young debtors is thought to be the result of the sluggish job market, directly affected by the country's continued economic slump.

Last month, Statistics Korea estimated that of the country's population aged between 15 and 29, 443,000 people were not working or looking for a job in the month of July. This figure excludes job-seekers who have not yet gotten a job but are nonetheless considered part of the "economically active population."