South Korea to Incorporate Naver Data into Small Business Credit Scoring
South Korea’s Financial Services Commission (FSC) is developing a new credit scoring model for small business owners that prioritizes growth potential over traditional financial history. The new Small Business Credit Bureau (SCB) model will incorporate non-financial data from Naver’s SmartStore and Naver Place platforms, aiming to provide a more comprehensive assessment of self-employed borrowers.
Addressing Limitations of Traditional Credit Scoring
Current credit scoring models heavily rely on past financial transaction records and collateral to predict default risk. According to the Korea Credit Bureau (KCB), personal credit factors, such as repayment history and loan/card information, account for 75% of the evaluation. This system has historically disadvantaged young entrepreneurs and early-stage businesses with limited financial histories, often resulting in lower credit ratings and restricted access to finance.
Leveraging Naver’s Platform Data
Naver’s platforms contain extensive data beyond traditional payment amounts and transaction volumes. Key data points include customer ratings, reservation records, refund rates, repeat customer metrics, and visitor trends—all indicators of business stability and growth potential. Customer ratings reflect product and service satisfaction, although changes in reservations and order volumes provide timely insights into business performance. Financial industry observers believe these metrics offer significant discriminatory power and can enhance credit evaluation systems.
Expanding Financial Access
The FSC has been in discussions with major platform companies to address limitations in traditional credit scoring. An official from the financial sector noted that utilizing platform data in credit scoring will greatly expand financial access for borrowers with moderate to low credit. The new model is expected to benefit early-stage entrepreneurs and those seeking to re-establish their businesses.
Kakao Bank’s Success with Alternative Credit Models
The move follows the success of alternative credit rating models implemented by other financial institutions. Kakao Bank, for example, has approved loans to customers previously rejected based on traditional credit scores, including a shopping mall owner in their 30s and a restaurant owner with a credit score in the 700s. From 2023 to June of last year, Kakao Bank’s credit loans totaled 50.7 billion won, while maintaining a stable delinquency rate of 0.51%.
Future Developments
The FSC plans to continue discussions at the Credit Rating System Reorganization Task Force and present results within the first half of 2026. Perform is also underway to build an integrated information center (SDB) to manage financial, non-financial, and unstructured data of small business owners, such as commercial district foot traffic and tax payment information. The activation of alternative credit rating models for ‘new filers’ – those with insufficient financial transaction history – is also being accelerated.
Implications for Small Businesses
The incorporation of Naver data into credit scoring is expected to improve credit limits and interest rates for small business owners, potentially converting them into high-quality borrowers. The FSC anticipates that this new model will expand the supply of funds to small businesses with demonstrated growth potential, mirroring the support provided through technology credit rating (TCB) for technology companies lacking collateral.