China's central bank has revised its credit reference system to report individual credit records only for the previous five years, a controversial change from the previous policy of reporting entire credit histories.
The system will not show credit defaults from before October 2009, and going forward will stop reporting defaults after five years. It will no longer shows information such as employer, address or housing funds, the Chongqing Economic Times reported Saturday citing staff from the Credit Reference Center of the People's Bank of China (PBC).
The Credit Reference Center of the PBC was not reachable on Sunday.
"A person with no credit default within five years should be regarded as having a good credit record," the Guangzhou Daily reported Sunday citing Lin Caiyi, an economist from Guotai Junan Securities.
Media reported that the shortened period could encourage people to improve their behavior to create a better credit report.
"Five years is too short for credit analysis," Lu Zhengwei, a senior economist with Industrial Bank, said on his Sina Weibo Sunday.
Effective analysis must based on longer periods, Lu said, noting that even without shortening the period, one could take improved behavior into account. Lu also disagrees with the deletion of employer information, saying that the information could help analyze income stability.
Some netizens have expressed concern, with one individual named Li Jinlei commenting on his Sina Weibo Saturday that the new policy could encourage people to deliberately default, thinking that their tainted record will disappear five years later.
The central bank should solicit public opinion about the reporting period, while the credit default record should be kept forever to meet different demands, Liu Junhai, a law professor at Renmin University of China, told the Global Times Sunday.
A five-year report might be enough to serve as a reference for commercial or financial deals such as mortgage or auto loans, but not enough for other purposes such as selection of government workers, where stricter standards apply, he said.
The central bank collects individual and company information including personal, lending and payment information from commercial banks and other financial institutions. It then integrates the information and creates a report which allows commercial banks to verify the customer's identification and set different rates based on credit status.
As of September 2008, the information system contained 600 million individuals' information, with credit history for 100 million people.
In 2005, the central bank shared the information with other relevant government agencies such as courts, tax bureaus and industrial and commercial administrators.
Different credit systems exist in different government agencies in China, and it is an expanding trend that these different systems will network to share information, Liu said.
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