Demand for the credit data of consumers is surging rapidly because of the boom in internet finance in China.
The State Council on July 16 issued a guidance to speed up the establishment of a credit-based regulatory mechanism, encouraging market entities to take good use of credit reports in a wide spectrum, especially in government procurements, bidding, administrative approvals, market access and auditing.
Baihang Credit, China's only licensed and market-oriented personal credit agency, has dealt with more than 7 million inquiries since May, when its data officially opened to institutional clients.
New products will include anti-fraud reports and personal credit ratings which are expected to be launched this year
Baihang focused on rating consumer credit information by non-bank finance providers, such as online peer-to-peer lending platforms.
It was granted a three-year license by the People's Bank of China, the central bank, in February, 2018. With registered capital of 1 billion yuan (US$145 million), Baihang was founded by eight credit firms, including the National Internet Finance Association of China, Tencent Credit and Alibaba-backed Zhima Credit.
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Its most important products are customer credit reports where it receives a daily average inquiry of more than 150,000 and the number is expected to soar to one million in the next months.
Besides basic personal information and bank loan records, the system includes mobile phone usage, online shopping, credit records from internet-based lending platforms, legal disputes, traffic violations, and overdue notices of water, electricity and other public supply fees.
The firm provides a fraud blacklist and information verification.
New products will include anti-fraud reports and personal credit ratings which are expected to be launched this year. The firm is developing a mobile phone application for individuals who want to look up their own credit report so that they can challenge or dispute entries in the data.
By July 10, the firm has signed agreements with 976 institutions, about 40 percent are internet-based financial service providers, and reached deals on information sharing with 105 of them.
Company chairman Zhu Huanqi said Baihang is expected to have about 1,000 partners by the end of the year starting information sharing.
Zhu added the company collected data on more than 63 million people and that would hit 150 million people by the year's end.
Most of the data belongs to people in their 20s and 30s who often prefer online platforms to borrow small loans, he said. But these platforms are sometimes isolated from each other which is a cause of weak risk control.
Among 860 online peer-to-peer lending platforms nationwide, many loans are paid using funds borrowed from another platform and the overall debts often exceeded the borrowers' ability to pay, which is the biggest problem in the industry, according to a survey by wdzj, a website that provides information about the peer-to-peer loan industry.
The task of Baihang is to link up data among different online lending platforms and share credit information to prevent borrowing on multiple channels and fraud among others.
So far, all Baihang's products are free to clients, but the company plans to charge a fee in the future when the markets' worth will be in the hundreds of billions of yuan, said Zhu.
Yang Dong, director of the Research Center of Finance Technology and Cyber Security at Renmin University of China, believes the application of personal credit data will expand from lending to more commercial scenarios, such as deposit-free leases.
Credit ratings will penetrate many aspects of life in the future, from shopping to traveling, serving more public and commercial functions, he said.
HONG KONG NEWS