In China, dissenting political remarks, traffic violations, and even not visiting your parents enough can lower your credit score!

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Many people are slightly confused as to how credit scoring works here in the U.S., with different scores, three separate credit bureaus, and even multiple scoring models. But our credit scoring system is downright easy compared to the system of credit in China – where confusion and even bizarre factors abound.

In fact, one of the things that could potentially drop your credit score in China is if you have elderly parents and don’t visit them enough! Believe it or not, it’s true, a new rule in the Communist nation decrees that adults in the city of Shanghai that live apart from their parents must “visit or send greeting often,” and if they don’t, their credit score could take a hit.

The government of Shanghai just announced this new law, called The Protection of the Rights and Interests of the Elderly, which takes effect May 1. They didn’t release information how frequently they consider “often” to be or what “sending a greeting” entails, or even how it will be monitored and enforced, but it does give parents a right to file a lawsuit for neglect against their children who don’t visit.

It seems completely random to us in the west why credit score would be affected by visiting parents, but it’s part of the a Chinese government push to promote responsible citizenship, as the capital city of Beijing instituted a similar decree in 2013.

Trying to figure out China’s credit scoring system is a monumental task, as it’s a fractured system in its infancy at best. Traditionally, most people in China didn’t go to banks for loans and didn’t have a credit score or history like our U.S. version.

But throughout its modern history, the Chinese government kept a Permanent Record on almost all of its 1.8 billion citizens, called a dangan. It was a way for the Communist and often-oppressive regime to keep tabs on its people, and often monitored by state sponsored employers.

So most people these days don’t have a credit rating at all and borrow money from family, friends, and private sources, not banks. Chinese banks are all state owned, and focus on providing funding to state-owned enterprises, large businesses, and high net-worth individuals. Most people use debit cards far more than any credit card, and it’s usually only wealthy or upper-middle class city dwellers that can obtain financing for purchases like cars or houses. When there is an emergency or large medical bill to be paid, citizens rely on their savings or pool money within the family.

In fact, an estimated 36 percent of people from mainland China have borrowed money in the past 12 months, but only 9 percent took a loan from a bank.

But that could change, as a May 5 report in Chinese state media accounts for a move by the National Development and Reform Commission (NDRC) to implement a nationwide and universal credit monitoring system to take effect by 2017.

The proposed mandatory credit rating system will not just be used by potential lenders, but look to judge each person’s “sincerity in society”, including if they make dissenting political or anti-Chinese comments on social media. Some of the other factors that will reportedly determine credit include taxation, government transactions, finance, judicial matters, and even traffic violations.

As of now, China’s effort to build this national credit scoring system has been piecemeal, and features many private companies and entities. The People’s Bank of China now is forming a traditional credit rating system and has approved eight private firms to develop Internet platforms to provide credit ratings based on data collected and perceived risk.

Some of these include Wedefend out of Hong Kong and Sesame Credit Management, which recent ran a nationwide Beta test of its credit rating system that emulates international credit models, with a score between 350 and 950.

But the particulars of credit score in China differ wildly from there. People with 600 or above scores can automatically take small loans for 5,000 yuan (about $800) when they are shopping on a certain sponsored online marketplace, and the loan amounts go up as the credit score rises.

Chinese citizens with high scores get a variety of perks like being able to apply for travel visas to foreign destinations like Luxembourg and Singapore without bulky documentation, preference for bank loans, high-speed check ins for flights and renting cars without leaving deposits. In fact, Sesame Credit even encourages its users to brag about their credit scores online, and there are online games that are popular especially among university students where you can compare your credit score with your friends and win prizes.

But certain borrowers are “Black Listed” from borrowing again for bad practices or violations as trivial as buying video games the government deems counterproductive to state ideals, and social media accounts and posts are carefully monitored for signs of interactions or factors that can be perceived as risky.

It’s all part of creating that “sincerity in society” rating, which means sticking to traditional Chinese values and the Socialist market economy even as China grows and functions in the world’s capitalistic marketplace.


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