New credit record system focuses on basics
China's central bank launched a new system on Sunday to better disclose the credit records of both individuals and enterprises, which will provide more details of a person's credit status in a better format, including co-borrowing and loan repayment records.
It has become increasingly obvious that losing credit makes it difficult for a person to do many things, which means personal credit information is playing an increasingly important role in society. But personal credit records have raised some issues that should not impact the credit records.
In personal credit records, for instance, there has emerged a tendency of "pan-moralization". For example, if a person does not pay property tax or jumps the red light, he or she should get a bad credit record, which would have an impact on his/her application for a bank loan. But credit records should not be used to peek into individuals' private lives.
It should be used only to check whether a person has kept his or her word and repaid the money he/she borrowed on time.
The central bank's new credit system is an improvement on the old mechanism. For instance, it widens the scope of "personal guarantee" for enterprises, co-borrowing by couples, and the default amount, if any, in two years.
In so doing, the new system aims to include long-term liabilities and contingent liabilities of individuals into their personal credit records to fully reflect their credit status. This will make the past practice of "taking a new loan to repay an old loan" or "fake divorce" unworkable.
The new system also shifts the focus from many "pan-moralization" records and makes the "main business" of the credit recording system clear.
Despite heated discussions on whether people's overdue payment for necessary services such as electricity and water charges should be included in their personal credit records, such information, along with violation of traffic rules by individuals, has not been included in the new system.
Credit tracking should not be like super-policing used to evaluate whether a person is perfect. A person should not be labeled a "credit violator" only because of a temporary credit stain, and should be given time for "information repair". Credit information is becoming more and more important, but we still need to make credit records more targeted and free them from "pan-moralization".