China’s new credit rating system will even monitor people’s utility bill payments
- System developed by central bank to help government better control debt likely to be introduced soon, state media says
- But prevalence of shadow banking means official databases can only know part of the story, analyst says
A new consumer credit rating system being developed by China’s central bank could go so far as to record whether people have paid their utility bills, according to a state media report.
The People’s Bank of China (PBOC) has been building a database of individuals’ spending and payment records for some time, and an initial version of it is expected to be ready to go into service soon, Xinhua said on Saturday.
As Beijing battles soaring corporate and personal debt levels, the aim of the project is to develop a credit rating system similar to those used in other countries.
Last year, the PBOC opened a new consumer credit bureau, Baihang Credit Scoring Co, to support the work of its Credit Reference Centre.
In most countries, any form of debt is considered as part of your credit score. Utility bills would just be another measure that the bank would use to look at individual credit score.
Andrew Collier, managing director of Oriental Capital Research, said the new credit reporting system was a step in the right direction in giving banks a more comprehensive picture of an individual’s financial position and their credit risk.