Applying for a Lower Loan Rate Is Easy Now. Getting One Isn't.
Applications for the 'interest rate reduction request right,' which lets borrowers ask banks to cut the interest on their loans, have surged — yet the share of requests actually granted has hit its lowest half-year level since such statistics were first disclosed in 2022. According to the Korea Federation of Banks' consumer portal, applications in the first half of this year jumped 77.0% from the second half of last year to 2.679 million. But the acceptance rate — the proportion of requests granted — stood at just 19.1%, barely two in ten. Of the applications, 2.567 million were for household loans, making up the overwhelming majority of the total.
Behind the surge in applications is the MyData-based rate reduction request service that took effect in February. Once consumers grant a one-time consent to a MyData provider and select the eligible loans, the provider can apply on their behalf based on their credit information — sparing them the old hassle of assembling employment certificates and income documents for a trip to a bank branch.
The number of approved requests did rise, climbing 22.5% from 418,000 in the second half of last year to 512,000 in the first half of this year. But that fell short of the growth in applications, dragging the acceptance rate down 8.5 percentage points from 27.6%.
What Counts Is the Bank's Own Report Card, Not Your Credit Score
The reason borrowers are rejected even after their credit scores rise lies in how banks evaluate them. Alongside the credit score from external credit bureaus (CBs), banks use their own credit scoring systems (CSS) to take a comprehensive look at income, employment status, debt size, delinquency history, transaction records and more. Even with a higher external score, the rate stays put unless the bank's internal assessment shows the borrower's risk has meaningfully declined. A modest salary increase is unlikely to be judged an improvement in repayment capacity if the borrower has taken on new card loans or overdraft debt. Conversely, moving to a stable job or paying down a significant portion of existing high-interest debt can be recognized as grounds for improved credit standing.
The interest rate reduction request right is not a mechanism for demanding a lower loan rate simply because market rates have fallen; it is a system for proving that your repayment capacity and credit standing are better than when you took out the loan.
The total interest reduction granted through accepted requests in the first half of this year came to 73.43 billion won, up 0.8% from 72.88 billion won in the second half of last year. Set against the 22.5% rise in accepted requests over the same period, the average reduction per request shrank.
Acceptance rates varied by bank. Among internet-only banks, KakaoBank stood at 13.2% and Toss Bank at 11.8%. The five major commercial banks (KB Kookmin, Shinhan, Hana, Woori and NongHyup) recorded 29.3%, with Shinhan Bank topping the list at 47.8%. Woori Bank followed at 29%, Hana Bank at 28.7%, KB Kookmin Bank at 25.3% and NongHyup Bank at 18%. Shinhan Bank also shaved off the most interest, at 9.399 billion won. Each bank applies its own screening criteria and reduction ranges for these requests.
