1. How is the credit reporting system developed in China?
In order to advance the building of social credit system, and prevent and defuse financial risks, in line with the arrangements of the CPC Central Committee and the State Council, the People’s Bank of China (PBC) has been organizing financial institutions to build credit reporting system in an active manner. The national centralized commercial and consumer credit reporting system was launched in 2006. The Credit Reference Center of the PBC (CCRC) is in charge of the construction, operation and maintenance of the system.
The credit reporting system (i.e., the basic financial credit information database) has become an important financial infrastructure in China and plays an important role in facilitating financial transaction, alleviating financial risks, reducing financing costs for the public, creating financing opportunities and enhancing social credit awareness. Credit reports have become “economic identity cards” reflecting the credit behaviors of enterprises and individuals. At present, the consumer and commercial credit reporting system has collected information of 990 million natural persons and 25.918 million enterprises and other organizations, with 3,564 and 3,465 institutions connected to consumer credit reporting system and commercial credit report system respectively. The annual inquiries of the systems reach 1.76 billion times and 110 million times respectively.
Since the establishment of the credit reporting system, with an aim to improve credit reporting services, the CCRC has made continuous efforts to optimize and upgrade the software and hardware of the system, ensuring its secure and stable operation. China’s social and economic development in recent years proposes higher requirements for providing more effective supply of credit reporting and enhancing the level of credit reporting services, which are further technologically supported by the development of fin-tech. In order to better satisfy the demand of financial institutions and all sectors of society for credit reference, the CCRC has launched a new round of system upgrading and optimization in a timely manner, which is the building second-generation of the credit reporting system as the public names it.
2. What is the progress so far in upgrading and optimizing credit reporting system? Which version of credit report is used for inquiries by financial institutions and the public?
At present, upgrading and optimizing the system is still underway with no clear schedule for its launch. Credit report used for inquiries by financial institutions and the public remains the same version as before, not the so-called new credit report.
3. What changes are expected after the upgrading and optimization of the credit reporting system?
For current upgrading and optimization, we focus on improving system performance, optimizing the contents and display format of credit reports, improving product processing and service modes and enhancing system management in a bid to raise operation and service efficiency, and provide better credit reference services to financial institutions and the public.
4. In what ways are credit report improved after the optimization?
The credit reporting system has been operated for over a decade, so the basic structure and contents of a credit report have already taken shape. The new credit report mainly will improve the display format and its readability. Compared with the existing credit report, the new version to be introduced will add more information. For example, it will add nationality to the basic personal information and joint loans to credit information as well as information about individuals’ guarantee for legal persons and vice versa. Besides, the information updating frequency will be raised and the display format will be optimized to some extent as well.
5. How will the new credit reporting influence individual’s economic life?
With regard to this upgrading, its influence on individual’s economic life will basically remain unchanged because the institutions responsible for data reporting and the data categories covered by the credit reporting system are basically the same before and after the upgrading.
6. Does the credit reporting system collect information on individual’s payment of public utility bills, such as personal water, electricity and telephone bills?
At present, the system does not cover information on the payment of personal water or electricity bills.
Since 2006, the CCRC has explored collecting information on payment of public utility bills, which are designed on a “buy-now-pay-later” basis and reflect personal creditworthiness, in a bid to expand the coverage of the credit reporting system and establish credit profiles for more individuals engaged in economic activities. In the same year, the CCRC and the Ministry of Information Industry (currently known as the Ministry of Industry and Information Technology, MIIT) jointly released a document which upholds the principle of “reliable, prudent and collecting information one by one based on maturity” in the collection of regular payment and arrears information of individual telecommunication bills. With regard to the information of payment in arrears, the system only collects those identified as overdue bills for more than two months. With strict control over data quality, such information collection has been proceeded prudently nationwide.
According to international practice and global trends, the information about the “buy-now-pay-later” payment of public utility bills can reflect borrowers’ willingness to repay to a certain extent. It will be particularly helpful for information subjects without any or with insufficient information records when they try to obtain credits.
In China, there are still 460 million natural persons without credit records. By collecting information about their “buy-now-pay-later” payment of public utility bills upon their consent, more personal credit records will be established for whose who lack credit borrowing records, which will facilitate credit risk assessment by lenders and accordingly help them access financing at a lower cost.
Therefore, the new version of credit report will apply the same template of existing report to present information about payment of public utility bills, such as water, electricity and telecommunication bills. However, in practices of information collection, the CCRC will work with relevant data source institutions and see to it that Article 13 of Regulation on Credit Reporting Industry is strictly implemented, which stipulates that “The consumer credit reporting agencies should obtain the data subject consent before gathering his/her personal information. Personal information should not be gathered without the consent of the data subject.” Thus, data source institutions should only report the data upon the authorization of information subjects. Meanwhile, the CCRC will strictly control data quality so as to ensure that only when the quality and safety of data is guaranteed, will the database collect the data and make it available to external inquiries.
7. What’s the consideration for collecting information about joint loans?
“Joint loan” refers to a loan made to two or more borrowers who shall be jointly responsible for repaying the loan. Based on the practices of international credit reference, the information of a joint loan will be displayed in the credit report of each borrower, which will also be taken into account by financial institutions when assessing the credit risks of the borrower.
According to Article 87 of the General Principles of the Civil Law of the People's Republic of China, “each of the joint debtors shall be obliged to pay off the entire debt.” Therefore, it’s necessary to include information regarding joint loans in each borrower’s credit report to truthfully and accurately reflect the creditworthiness of the borrower.
The CCRC, in line with the principle of respecting facts, explores to incorporate the information of “joint loan” into the new credit report, which will be displayed in each borrower’s credit report to truthfully reflect his/her liabilities. In the case of alteration of borrowers, the credit reporting system will update the information timely according to the information submitted by financial institutions to keep an objective and accurate record.
8. Why is the new personal credit report designed to display the “repayment record of the last five years”?
The new personal credit report is designed to display the “repayment record of the last five years” (including the repayment status and overdue amount), while the existing report also shows such information yet in a slightly different way. The purpose is to better reflect the creditworthiness of information subjects and help the public accumulate their credit wealth and secure financing.
9. How does the credit reporting system safeguard the legitimate rights and interests of information subjects?
The CCRC strictly follows the Regulation on Credit Reporting Industry, and conducts credit reporting activities according to laws and regulations, to protect the legitimate rights of information subjects including rights to know, consent and dissent, and rigorously safeguard information security. Efforts are made in the following aspects.
Firstly, it safeguards the right to consent of information subjects. The CCRC strictly follows the rules of the authorization systems of data reporting and inquiry, urges financial institutions to fulfill their obligations of authorization, reports and inquires data in compliance with relevant rules and regulations. It also regulates the inquiries from institutional users, reinforces the monitoring of illegal inquiries, timely detects such engagements and takes measures to stop them.
Secondly, it safeguards the right to know of information subjects who have the right to obtain their credit reports for free twice a year. The CCRC provides query services through the Internet, counter services, automatic query machines and other means, raises public awareness of their own credit records and regulates their credit behaviors. Since the credit reporting system started to provide services to the public, the inquiries of personal credit reports on one’s own have been increasing year by year, reaching 96.883 million times in 2018.
Thirdly, it safeguards the right to dissent and rectify of information subjects. The CCRC works with financial institutions to earnestly handle dissents and constantly improves the work efficiency to ensure information subjects receive timely and professional services in dissent handling and information rectification. In 2018, 41,000 dissents from individual users were processed with 99.6% of cases replied and 99.2% settled.
Fourthly, it safeguards the right to restore credit records of information subjects. A restoration mechanism of credit information is established within the credit reporting system. The bad record of an individual will be filed in the credit reporting system for five years starting from the date when the bad behavior or event ends, after which the record will be deleted from the credit report.
Fifthly, it safeguards the information security of information subjects. The CCRC attaches great importance to the information security of information reporting efforts and keeps improving the information security management system and the overall security level of the system by various means. It strives to ensure the safe and stable operation of the credit reporting system all year round and guard against the risks of information leakage, thus ensuring information security.
Lastly, it continues to enhance the propaganda and education of credit information. The CCRC actively boosts the education activities of credit information through various channels to popularize the knowledge about credit information and promote public awareness. In the future, after the new version of credit report is officially put into use, the CCRC will further enhance the education efforts to remind information subjects of their own credit status as well as their own protection of legitimate rights and interests.
10. How does an individual ensure the security of his/her credit records?
As the CCRC reminds, identity documents shall be taken good care of and the copies of ID shall be marked with specific purposes; personal credit reports shall also be kept safe and not be discarded carelessly or provided to other commercial institutions rashly; and credit reports shall be timely deleted when inquired or saved via public network.
