The average interest rate for new unsecured loans at the three major internet-only banks has fallen as the proportion of high-credit borrowers has significantly increased.

Conversely, loan interest rates for low-credit borrowers have risen to nearly 8 percent.

According to the Korea Federation of Banks' consumer portal on July 6, the average credit score for new general unsecured loans issued by Kakao Bank, K-Bank, and Toss Bank in May was 915, an increase of 16 points from the previous month (899).

The average credit score had fluctuated, falling slightly from 903 in January of this year to 902 in February, before rising again to 905 in March.

It then fell by 6 points in April, but saw a sharp increase in May.

By bank, Kakao Bank's average credit score rose by 39 points to 917, and Toss Bank's rose by 10 points to 930.

However, K-Bank saw a slight decline, with its average score dropping from 899 to 897.

The banks explained that as demand for loans increased, there was also an influx of borrowers with higher credit scores.

Kakao Bank stated, "We provided more loans to mid-to-low credit borrowers in May compared to April," adding, "It appears that the average credit score rose compared to the previous month as the influx of customers with relatively higher credit scores also increased."

While the average interest rate fell as credit scores rose, interest rates for low-credit borrowers increased.

The average interest rate for general unsecured loans at the three internet banks based on new loans in May was 5.58% per year, down 0.11 percentage points from the previous month (5.69%).

However, the average interest rate for borrowers with a credit score of 600 or lower rose to 7.89%, up 0.29 percentage points from the previous month (7.60%).

This trend is the opposite of that seen at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank), where the average interest rate for the same category fell by 0.14 percentage points to 7.86% from the previous month (8.07%).

Kakao Bank's average interest rate for borrowers with a credit score of 600 or lower rose by 0.41 percentage points from 8.71% in April to 9.12% in May.

Toss Bank and K-Bank saw their rates rise by 0.43 percentage points and 0.02 percentage points, respectively, to 8.40% and 6.15%.

The internet banks explained that since the interest rates disclosed by the Korea Federation of Banks are the average of new loans issued during that month, fluctuations can occur depending on the composition of borrowers and the mix of products.

Kakao Bank explained, "The segment for credit scores of 600 or lower includes financial products for low-income individuals, debt restructuring loans, and loans for business closure support," adding, "The average interest rate tends to be affected by the credit scores of borrowers who took out loans that month and the composition of the products."

Toss Bank also stated, "The interest rates disclosed by the Korea Federation of Banks are not the rates applied to individual borrowers, but the average of new loans executed during that month," and added, "Because the number of loans handled in the 600-or-lower credit score segment is small each month, the average interest rate can move significantly based on changes in the conditions of just a few borrowers."

Meanwhile, Toss Bank announced that it had corrected some of the general unsecured loan interest rates and average credit score figures it had previously disclosed on the Korea Federation of Banks' consumer portal due to input errors.

The figures in this article are based on the corrected disclosures.