According to a survey that the Ewha Voice conducted among 162 Ewha students, only four percent of them knew their own credit rating. Even worse, 63 percent of the Ewha students had no idea what the Credit Scoring System (CSS) was. “I rarely have a chance to confirm my credit rating because I have not received a student loan from the bank. Moreover, I do not even know how to check my credit rating,” said Lee Hye-jin (Psychology, 2).
The CSS is a system that many banks in use to evaluate not only the credibility of small business loan applicants, but also for student loan applicants. The rating varies from 1 to 10 and is used to rank the level of risk for loan applicants. Payment delays on various bills such as phone bills, credit card bills, electricity charges and the like lower the individual’s credit rating.
However, according to the statistics from the Korea Housing Finance Corporation (KHFC), which is in charge of the student loan system along with the government, about 2,461 students were not able to get student loans because of their low credit rating. For students who are already receiving student loans from the government, delaying their interest payments affects his or her credit rating severely. “The information of a payment delay is transferred to Credit Bureaus from the banks. By taking that information into consideration, the Credit Bureau adjusts the person’s rating,” said Kim Ki-bum, a staff at the KHFC.
Kim added that credit ratings affect the decision of allowing student loans after the KHFC gathers information about the student’s credit rating by using its own credit evaluation system as well as information from the Credit Bureaus.
To solve the problem of lack of knowledge about the CSS, The Chosun Ilbo and Korea Credit Bureau (KCB) is holding a campaign promoting people to confirm their individual credit rating online from May 6 to June 5. This is good news to the 78 percent of Ewha students who wanted to know their credit rating, according to the survey conducted by the Ewha Voice.
"Anyone who wants to check out their credit rating can access the homepage (http://www.allcredit.com) and check their credit rating for free,” said Lee Hwa-jin, a staff member at KCB. “Most of students usually think that they are not closely related to CSS because they do not have fixed income but receive allowances. However, I think students should consider their credit rating when they are young since they will get employed in the near future,” said Choi Hye-jung (Sociology, 2).
The importance of obtaining one’s credit rating cannot be overemphasized. “It is crucial for university students to confirm their credit rating so that they can be prepared for the future financial crisis,” said Choi Sung-jin, the chief at the Department of Public Relations Team of KCB.
According to the KCB, there are three tips for university students to get high credit ratings. First of all, students should confirm their credit file regularly. Secondly, students need to avoid delaying any payments for Internet, cell-phone, and various public charges. Even though the arrears might be small, it is important to make sure they are paid in time. Lastly, concentrating on a certain financial agency for your financial transaction such as paying credit card bill, public charges continuously will give increase one’s financial credibility.
caption: An example ofa credit rating check from the Korea Credit Bureau.