Social media users scrambled to check their credit scores on Aug. 21 after a user on X, formerly known as Twitter, shared that five prospective employees applying for a job at her workplace, a financial institution, had been rejected over their bad credit history.

“All five of them did not make it because our BI [Bank Indonesia] Checking showed that they were Kol 5 members,” user @kawtuz wrote on X on Aug. 21.

BI Checking, now called SLIK OJK since the Financial Services Authority (OJK) took over responsibility for the program in 2018, refers to a database of consumers’ credit histories with financial institutions under the OJK’s supervision, including banks and multifinance firms.

“Kol”, meanwhile, refers to a five-tier ranking of the collectability of a person’s loans. Kol 1 shows a healthy ability to service one’s debts, while Kol 5 shows that a person’s loan payments are severely overdue.

A number of social media users had questions about how and where these metrics were being used.

“What if someone falls behind on the payment because they’re having emergencies?” user @nicetryera asked, adding that they often used buy now, pay later (BNPL) features found in many credit applications and even e-commerce and ride-hailing platforms such as Shopee and Gojek.

Meanwhile, user @gbrlbskr applauded the checking system his company had implemented to “lower the risk” after an employee at his workplace had been found to be in severe online gambling debt.

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Indonesians’ use of pay later services has increased by 17.7 percent from last year, according to research by Kredivo and the Katadata Insight Center. Pay later payments now surpass bank transfers by more than 6 percent.

This has also led to the rise of nonperforming loans. Data from credit rating agency Pefindo showed some 6.78 percent of loan payments were overdue in the first half of the year.

Data from the OJK shows that as of April, some 2.3 million Jakartans owed a combined total of more than Rp 10.3 trillion (US$678.6 million) to online lenders.

Fewer career opportunities?

Fildza a 24-year-old graduate student from South Tangerang, Banten, has always avoided pay later services, and the recent discourse has solidified her convictions.

“I’ve never wanted to because I don’t have a steady income yet, so I’m afraid I wouldn’t be able to pay,” Fildza told The Jakarta Post last week.

Fildza often buys skincare and makeup products on e-commerce websites, where she sees an abundance of discounts available to those who use pay later programs.

“But I just don’t want to have credit as a financing option in my life,” she said, adding that discovering that employers checked prospective employees credit histories made her even more wary of such services.

Read also: MUI East Java bans 'buy now, pay later' contractual scheme

Companies from several industries, ranging from food to management consultancy, told the Post last week that their human resources departments did not check the credit scores of job applicants because they did not see the relevance to their lines of business.

However, such checks are widespread in the banking, financial and insurance sectors, said Haekal, a regulatory manager at a commercial bank. He noted that his bank had never found a case of terrible credit from a job seeker.

Mortgage implications

Jobs aside, the OJK also revealed that an increasing number of young people were being denied housing mortgages (KPR) over late or missed payments to buy now, pay later services, even with arrears as low as Rp 300,000.

“Several banks shared with us that there are many young people who should’ve gotten mortgages for their first home but can’t because of their bad credit scores in pay later programs,” OJK commissioner Friderica Widyasari Dewi said on Aug. 18, as quoted by CNN Indonesia.

Read also: Debt trap: Millions of Jakartans owe trillions to online lending platforms

Friderica asked consumers to be more careful using such financing methods.

Meanwhile, some Indonesians have welcomed pay later services.

“I think I’ll be fine as long as I watch out for my pay later deadline,” freelance illustrator Saniyyah Nurul Izzah said.

Communications executive Agnes Johana said many products, from electronics to property, were now well beyond what normal wages could afford, so she did not see credit features such as buy now, pay later programs as the chief problem.

“Sometimes there is an urgency that arises in your work life, so of course people use them,” she said.