Knowledge is the Power to Protecting Your Credit

이다혜, 홍석준l승인2017.03.06l수정2017.03.06 11:53l352호 1면

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▲ The DKH suggests 3 ways to get good credit score.

 In our country today, many students have a bad credit score, even before going they’ve had a chance to step into the working world. They become debt delinquents because of their education expense loans or from overusing their credit cards. There are several reasons students have a bad credit rating, but the primary reason is their student loan. According to the Ministry of Education, the average student loan upon graduation is approximately 6 trillion won.

 In addition, according to data from the Korean Housing Finance Corporation, about 450 students failed to pay back loans of less than 100,000 won owed to KHFC. As a result, they became debt delinquents for such a small sum.

 Young people also take out loans, at high interest rates, from savings banks or private money lenders, because there is no need to put up any collateral.. The qualification process is usually as simple as making a phone call to a private lender to submit the loan request. Students rarely consider the burden of the 30% interest rate when choosing this option, Young people also get money from pyramid schemes.  This highly unreliable source of funding relies on regularly recruiting of new members to the scheme. The profits are unstable because recruiting new members is not easy.

 So what can students do to ensure a good credit score? Here are some useful tips. First participate in the ‘Start-up Student Credit’ project. This program, run by the CCRS (Credit Consulting & Recovery Service) the KCB (Korea Credit Bureau) and KOSAF (Korea Student Aid foundation), was launched in 2015 and aims to educate students on proper credit management. Through this campaign, students can check their personal and financial data and monitor any change in their credit score. The program also provides educational lectures about financial matters on their ‘All Credit’ website.

 Second, use ‘DeunDeun living expense loans’ as an alternative to common loans. Students are able to get loans to cover general living expenses such as food, transportation, books, etc. During a semester, students can qualify for loans of up to 3,000,000 won. The redeeming feature of this loan is that you only need to begin repayment once you secure employment, so students can focus on studying and preparing for employment instead of repaying loans with exorbitant interest rates.. Furthermore, students from lower-income brackets, who receive basic living cost payments from the government, are exempt from any interest on these loans. The only requirement for qualification is that you are enrolled in school and your tuition is already fully paid. The purpose of the loan is to help students with living expenses, while attending school only.

 Borrowing money from financial corporations is on the rise as students believe they can handle repayment of the principle and interest.  However in reality, the total monies owed tends to overwhelm the student, and they rapidly realize they cannot afford the terms of the borrowed money. Essentially the monies may be easy to get, but not as easy to repay.

 To get realistic and professional advice for university students, the DKH interviewed people in charge of financial education at the Financial Services Commission (FSC) and Financial Supervisory Service (FSS). We learned that the main reasons students become credit delinquents are economic depression and the job crunch. To prevent more young people from this failure early on, the FSS offers lectures with practical financial advice at universities across Korea. The goal of these lectures is to provide basic financial knowledge applicable in every day real life. The lecturer provides real case scenarios that are intended to help students protect their credit scores. Last semester, this lecture was held at Dankook University’s (DKU) Jukjeon campus. This semester, it will be also held at the Cheonan campus. This will provide Dankookians easy access to financial management information. Also, students can watch a video lecture on the topic at http://edu.fss.or.kr. If students connect to http://fine.fss.or.kr, they can find a lot of useful information on the topic of borrowing money.

 Representatives from these organization said, “To prevent students from becoming delinquent borrowers, they need to learn practical knowledge, and students need to put this knowledge into practice in their real lives. Therefore, it is really important to record their income and expenses carefully.”  They suggested that making a plan, and putting that plan into practice, can be very helpful, even if it fails. They also promoted the use of a debit card over a loan to better manage your interest burden.

 While student credit rates are weakening, it is arguably a lack of practical financial knowledge that drives students to become credit delinquents. Therefore, students should check their spending patterns often. If they are in arrears with their student loan program or if the amount owing on their credit card is excessive, they have to make some changes in their spending habits. Above all, everyone must be suspect about easy money. Nothing is easy.  There is always a catch. So focus instead on developing good habits of saving and managing your money well. These reliable old habits can bring real fortune for those who are most committed. Students can change their bad money habits by being open to the various financial education sessions available to them. It’s never too late to turn those bad habits around.


이다혜, 홍석준  dankookherald@gmail.com
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