Korea Credit Bureau to Integrate Pension Payments in Credit Scores

Source: Regulation Asia Editors, Regulation Asia 2020-07-20

Pension contributions data will be converged with KCB credit data using homomorphic encryption, technology which allows data analysis to be performed on encrypted data stored at different institutions.

The KCB (Korea Credit Bureau) will integrate information about individuals’ pension payments in its personal credit rating system from October this year.

The KCB was founded in 2005 by 18 major financial companies in Korea as part of efforts to improve credit data and reporting in the aftermath of the global financial crisis.

Since December, convergence of KCB credit data and the National Pension Service’s contributions data has undergone testing in the FSC (Financial Services Commission) regulatory sandbox using homomorphic encryption, technology which preserves privacy by allowing for data analysis to be performed on encrypted personal financial information stored at different financial institutions.

“Taking into account research findings that show a positive correlation between diligent contribution payments to national pension and low probability of loan defaults, the improved personal credit rating system will offer additional points to personal credit scores for the period of diligent contribution payments,” the FSC (Financial Services Commission) said in a statement.

” Up to 550,000 KCB-registered national pension subscribers are expected to see their credit scores go up. In particular, recent graduates and young adults who have thin credit records will benefit from this system.”

Earlier this month, the FSC announced enhancements to CreDB, a separate credit information system launched by KCIS (Korea Credit Information Services) last June. Among the enhancements, the CreDB system is providing access to new datasets including anonymised information on 50 million insurance consumers, with plans to also add educational and ‘user tailored’ databases.

Separately, the FSC recently granted a credit bureau licence to KODIT (Korea Credit Guarantee Fund) to facilitate the development of a new points-based business credit scoring system that uses SMEs’ non-financial information to generate credit scores.

KCB

FSC

Korea Credit Bureau to Integrate Pension Payments in Credit Scores

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