More than 70% of borrowers seeking Sait-dol loans, a mid-rate unsecured lending product in South Korea, have credit scores of 600 or below, but only about 30% of them go on to sign actual loan contracts. The product is designed to widen financial access for borrowers with mid-to-low credit, yet the share of lower-rated borrowers drops sharply once loans are actually taken out.
Borrowers with credit scores of 600 or below accounted for 72.3% of customers who checked their Sait-dol loan limits between January last year and July this year, according to loan comparison platform Finda on the 26th. By score band, borrowers in the 600s made up the largest group at 44.9%, followed by those in the 500s at 22.0%. Demand for the product is concentrated among borrowers with relatively low credit scores.
The distribution looked different among customers who actually signed loan contracts. Over the same period, borrowers with scores of 600 or below made up 36.4% of Sait-dol contract customers, about half the 72.3% share seen among those checking loan limits. Borrowers with scores of 700 or above accounted for 63.6% of all contract customers.
Notably, borrowers in the 600s, the largest group among those checking loan limits, were relatively underrepresented at the contract stage.
Sait-dol loans are mid-rate loans supplied by banks and savings banks on the basis of guarantees from SGI Seoul Guarantee, aimed at improving financial access for borrowers with mid-to-low credit. Once a borrower applies, the lender and SGI Seoul Guarantee review the application and decide whether to extend the loan and at what limit.
The government earlier revised the eligibility requirements for Sait-dol loan supply and strengthened the product's role in serving mid-tier credit borrowers starting in July. The core change requires that at least 70% of total lending go to borrowers in the bottom 20% to 50% of credit scores. For low-credit borrowers in the bottom 20%, the government plans to provide lower-rate funding through policy finance programs for low- and middle-income households, backed by fiscal support and contributions from financial firms.
Attention now turns to whether Sait-dol lending reaches more broadly into mid-tier borrowers with relatively lower credit, including those in the 600s, following the rule change. "There appears to be a gap in the credit score distribution between borrowers who seek Sait-dol loans and those who actually use them," an official in the financial industry said. "We need to watch whether actual use expands to mid-tier borrowers with relatively lower credit going forward."
