Borrowers Irate At Nosy Lenders

The Financial Supervisory Service is looking into allegations of improper credit checks made by local branches of Japanese lending firms, the regulator said Monday.

"We have received many complaints from people who say their credit records have been checked without their consent by Japanese lenders operating here," an official at the supervisory agency said.

It is illegal to run credit checks on borrowers or other persons connected with the borrowers without their approval, which is usually sought at the time of a loan application. Some of the complainants are relatives of persons who applied for loans; they say that they have been denied loans at other financial institutions because of the unapproved checks, the official said. Credit records contain notations of credit checks, and many lenders use those notations to gauge a borrower's riskiness. Evidence of attempts to borrow from private lenders would be a red flag, suggesting that the would-be borrower is not creditworthy.