learn the conditions for delinquency removal and how to repair your credit score. learn practical ways to get rid of late payments and get out of financial restrictions with good faith repayment assistance.
the penalties of a late payment history
when you don't pay your credit card bill or loan interest on time, a late payment history is recorded with the credit bureaus and credit reporting agencies. this information is shared with all lenders and directly affects how you're considered for loans, issued credit cards, and calculated your credit score.
once you have a late payment history, the first thing you'll experience is loan denials. you won't be able to knock on the door of a bank or savings institution when you need money in a hurry, and even if you are approved, you'll have to pay a very low limit or a high interest rate.
credit card restrictions are also a major inconvenience. not only will you not be able to get a new card, but your existing cards may suddenly have their limits reduced, which can be a huge constraint on your day-to-day financial transactions.
what's worse is that once you pay off a late payment, it doesn't just disappear. even after you pay it off, your late payment history will still be visible for a period of time, during which time you'll still be restricted from making financial transactions.
the difference between short-term and long-term late payments
there are two main types of late payments if you are overdue for more than 5 business days for $100,000 or more, it is called short-term delinquency, and if you are overdue for more than 90 days, it is classified as long-term delinquency.
short-term delinquencies stay on your credit report for one year after you make a payment. this is a relatively short period of time, but if you have two or more short-term delinquencies in the last five years, it will be extended to three years. repeated late payments accumulate penalties.
long-term delinquencies are much more serious: they remain on your record for up to five years after repayment, during which time it's virtually impossible to live a normal financial life. unless you get help from a credit repair organization, you'll be penalized for a long time.
your credit score will drop significantly while the delinquency remains on your record, which can affect your housing and even your ability to get a job. this is because some rental agreements and companies run credit checks when hiring.
learn more about our policy for removing late payments
the government is offering people who have made good faith payments to repair their credit. this support policy is a special measure for ordinary people and small businesses that have experienced economic difficulties after COVID-19.
eligible applicants are individuals and sole proprietors who incurred overdue payments of KRW 50 million or less between January 1, 2020 and August 31, 2024. the key condition is that the overdue amount must be repaid in full by December 31, 2024.
as of the end of June this year, approximately 3.24 million people met this condition, of which 2.72 million have already completed repayment. Those who have completed repayment will automatically have their delinquency information removed without having to apply.
if you're still behind on your payments, you'll still receive the same benefit if you pay in full by the end of the year. the credit bureaus will automatically remove the delinquency, which is a great way to start rebuilding your credit score.
how to take action to repair your credit score
even after your delinquency is removed, you need to actively manage your credit score. the first step is to keep track of your current credit cards and loans and set up automatic payments.
a good rule of thumb is to keep your monthly card spend within 30 percent of your limit. credit bureaus look at the ratio of your spending to your card limit. if you're maxed out, they may think you're financially unstable.
paying off unnecessary loans early can help, especially if you prioritize paying off high-interest loans first, which will reduce your interest payments and improve your credit score. but be sure to check for any early repayment fees.
you can check your credit score for free at the credit bureaus and on each credit bureau's website. checking your score regularly, once every three months, and analyzing the factors that cause your score to fluctuate can help you manage it effectively.
related article: 5 Surefire Ways to Boost Your Credit Score Related article: Government-backed loans for people with low credit Related article: Credit Repair Council Credit Management Programs at a Glance
frequently asked questions
Q. if I partially pay off a late payment, will it be removed? A. No. You must pay off the delinquency in full to be eligible for removal. partial repayment is considered keeping the delinquency in place and will not qualify you for benefits.
Q. can I still get some assistance for delinquencies over KRW 50 million? A. This policy only applies to delinquencies of KRW 50 million or less. For delinquencies above that amount, we recommend that you consult with the Credit Repair Council's separate program.
Q. will my credit score increase immediately after the delinquency is removed? A. It may take one to two months for the credit bureaus to re-evaluate your credit score after deleting the delinquency. how much your score increases depends on your overall credit health.
Q. can deleted late payments be added back? A. As a matter of policy, deleted delinquencies cannot be re-added, but new delinquencies will naturally result in a new record.
Q. do I need to apply separately to have my delinquency removed? A. If you meet the conditions, the credit bureaus will automatically process it, so you don't need to apply. However, we recommend checking your credit report 1-2 months after completing the repayment.
now is the golden time to rebuild your credit
for many people who have experienced financial hardship, the delinquency removal policy offers a fresh start. if you pay off your delinquencies by the end of the year, you can get rid of up to five years of penalties. repairing your credit score isn't just a number change, it's the first step toward getting your financial life back on track.
start today by creating an organized repayment plan and stay on top of your payments to avoid late payments in the future. please share your experiences and questions in the comments. the information you share will help many more people.