Credit Delinquents in Three out of 10 Households

As the number of credit negligence exceeds 3.5 million, three out of ten households are suffering from credit delinquencies.

The Korea Federation of Banks reported Wednesday that at the end of September, the number of credit delinquents hit a record high of 3,501,987 up by 89,373 or 2.62 percent from last year.

Considering that the Korean population was 4,851 million at of the end of 2002, credit delinquency occurred in every three out of ten households with a family of four members.

The number of credit delinquents under the age of 20 dropped by eight percent from late August. All other age groups showed an increase and those in their 30s showed the highest increase of 2.97 percent.

In particular, women in their 30s recorded highest growth rate (4.01 percent), followed by women in their 20s (3.32 percent), women aged 40 or over (3.13 percent), men in their 30s (2.37 percent), men in their 20s (2.15 percent) and men aged 40 or over (2.00 percent).

Analysts say that the number of female credit delinquents in their 30s increased partly because the husbands use their wives’ credit cards when they became credit delinquents.

Financial institutions reported the number of credit card delinquents who are not declared credit delinquency by several financial institutions at the same time. The Seoul Guarantee Insurance reported the highest with 214,392 followed by LG Card (95,777), Kookmin Bank (87,647), and the National Agricultural Cooperative Federation (61,834).

The Korea Federation of Banks said the growth rate of credit delinquents are stabilizing, as it recorded a 2.5 percent increase from May to September, compared to a 4.02 percent hike from January to April. Such trend is expected to continue by the first half of next year, added the Federation.

However, the credit card industry predicted the number of credit delinquents that would exceed 4 million if the current growth is not slowed.

“There will be no such sharp increase in the number of credit delinquents as in the first half,” Im Byung-choel, a researcher at the Korea Institute of Finance said. “But there are no other special counter measures than economic stimulus measures for the number of credit delinquents to return to negative growth.”

Chi-Young Shin higgledy@donga.com