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China’s central bank has upgraded the system lenders use to assess firms’ and individuals’ creditworthiness. Photo: Shutterstock

China’s financial credit database of 1 billion people, 28 million companies gets an upgrade

  • Latest version of system which lenders use to assess creditworthiness, provides more comprehensive profiles of firms, individuals, People’s bank of China says
  • Improvements part of Beijing’s broader plan to create a ‘credit society’ this year

China’s central bank has launched an updated version of its credit information system covering 1 billion individuals and more than 28 million corporate clients, which it says will provide more accurate profiles of loan applicants.

The upgraded system – which is used by the nation’s lenders to evaluate potential clients’ creditworthiness – went online on Sunday.

The upgrades include improvements to the information gathering and processing functions, as well as the technical framework and security, according to the credit bureau of the People’s Bank of China (PBOC).

The state-run database, which was introduced in 2006, is regarded as a key “national financial infrastructure project” and central to Beijing’s ambitions to create a “credit society” by this year.
It works by collecting information from thousands of institutions that track individuals’ and companies’ credit records.

The new credit reports produced by the system will contain more information than before, including details of a loan applicant’s spouse, financial guarantors, employment status, credit card records and installment plans, the PBOC said.

The central bank also plans to use the system to collect data about debts shared by groups of people, and individuals’ utility payment records – and the failure to pay gas and water bills in a timely manner could lead to a black mark on a person’s credit report.

It will also cover five years of financial records, rather than two as before.

The PBOC’s system, which will mostly be used for assessing credit card and loan applications and pricing, is less controversial than the credit record systems run by the National Development and Reform Commission (NDRC) and the courts.

The NDRC publishes a monthly credit blacklist online. In 2018, almost 17.5 million people were prevented from buying air tickets and 5.5 million from buying high-speed train tickets as a result of being included on the list.

The central bank said the upgrade to its system aimed to “better meet the credit demand of financial institutions and people from all walks of life, and suit the development trend of financial technologies”.

China’s financial regulators are trying to better evaluate the credit risk of individuals and small businesses, as well as crack down on unlicensed financial activities and online fraud.

“The credit system can effectively solve the information asymmetry in financial markets and facilitate the financing of small and private firms
Zhu Hexin

Since its launch more than 13 years ago, the personal credit system has been accessed by more than 3,700 financial institutions and last year alone received 2.4 billion inquiries, or about 6.6 million a day.

Speaking at a media briefing last summer, the PBOC’s deputy governor Zhu Hexin said: “The credit system can effectively solve the information asymmetry in financial markets and facilitate the financing of small and private firms.”

The new system will also allow individuals and entities to report their disagreements, while records of all queries will be maintained for two years.

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This article appeared in the South China Morning Post print edition as: Credit information system upgraded