66,000 Young People in Their 20s Struggle with Debt

The number of people in their 20s with credit issues has increased by over 25% in three years, reaching 66,000 this year. This is interpreted as a result of the worsening financial difficulties faced by young people.

According to the ‘Data on Credit Risk Factors by Industry for the Past 3 Years’ submitted to the office of Democratic Party of Korea member Lee Kang-il from the Financial Supervisory Service, the number of people in their 20s registered as credit risk factors with the Korea Credit Information Services as of the end of July was 65,887 (excluding duplicates), a 25.3% increase from the end of 2021 (52,580).

Compared to the fact that the total number of credit risk takers increased by about 8% from 548,730 to 592,567 during the same period, the increase among those in their 20s is notable.

If a credit risk holder exceeds a certain period of delinquency (e.g. 3 months after loan maturity or 6 months after delinquency), they will be registered with a credit information agency and will face financial disadvantages such as suspension of credit card use, restrictions on loan use, and a drop in credit rating.

The number of people who were registered as credit risk due to failure to repay loans received from banks was 33,610, accounting for half of the total. This was followed by savings banks (22,356 people) and credit unions (16,083 people).

A high proportion of small-amount delinquent borrowers was found to be a characteristic of youth debt.

As of the end of July, there were 73,379 people in their 20s (excluding delinquent credit card payments) whose short-term delinquency information was registered with a credit rating agency (CB), and 64,624 (88.1%) had a delinquent amount of ’10 million won or less’.

This means that 9 out of 10 delinquent borrowers in their 20s are small debtors.

It is estimated that a significant number of young people are experiencing difficulties related to their livelihood, such as living expenses or housing costs.

Rep. Lee Kang-il pointed out that, “Rather than simply resolving the small-scale delinquency problem among young people through financial means such as debt adjustment, we must also implement macro-level youth policies such as job creation and social policies.”

By Park So-hyun