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China Credit Bureau Underwriting

 

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China Credit Bureau Underwriting... Sizing up the problem(s).

The biggest concern is that there is very little credit issued in China. Want a German refrigerator for your Shanghai apartment?! Bring 45,000 Yuan. Sorry no 1,000 bills so just bring STACKS of 100's.

How can China exist (let alone thrive) in an economy where everyone drags wheelbarrels of cash?! How does China establish an electronic trail for money transfers to minimize the evils of cash-money transfer (money laundering, tax evasion, etc).

Second biggest concern. US credit bureaus "expertise" in what China should do. The answer ISN'T importing an expert on US consumer credit. Trans Union, Experian, Equifax (or D&B for businesses) are US experts. Chinese nationals don't borrow enough to implement a US "FICO" based system. The FICO system has never exported well. For example, the sky-high default rates in Korea after the implementation of the dire American credit triad: Experian, Equifax and Trans Union.

Up until now experts saw the chicken-egg credit dilemma in China.
To battle the chicken/egg issue (no borrowing means no credit data), there's a possible option that involves debit data analysis. In effect, consumers are evaluated based on the cash they spend. China has a mountain of debit data and it can be parlayed into the strong beginnings of a consumer credit profile. These are the underpinings of a debit reporting agency.

Common Sense Approach
If China may never adopt credit use, they why import a credit bureau system based on the assumption that all consumer will have multiple lines of credit? With mountains of debit data available, common sense would be to leverage that data, pool it and extrapolate information from it.

For example, Chinese companies have begun to use debit data to predict consumer behavior. China Mobile uses it to migrate users from pay as you go to month-to-month. EachNet uses debit data to build consumer profiles and predict likelihood of fraud.

The UCMS Answer:
Software that converts debit data into a consumer credit profile. This China Debit Reporting Agency (DRA) can be implemented immediately.

 

Next>>

Main Page: China Credit Underwriting
Page 2, China Credit Bureau Mistakes
Page 3
, China Credit Bureau Foundation
Page 4
, China Credit Bureau System.
Page 5
-China Credit Bureau Derivation
Page 6: PBOC Debit Report Effort
Page 7: Strengthening Public and Private Credit Registry Ties Larry Chiang's World Bank 2004 Presentaion in Power Point

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