Comparison Of The Personal Credit System

Individual credit system is a trademark of modern society. Individual credit system is an indispensable part in the perfection of modern social and economic framework. With the deepening of Chinese economic reform and the development of social economy, it is a crucial task to set up appropriate Chinese individual credit system. Under the support of the State Council, People's Bank of China, together with departments related, set up the first individual united credit information department---- Shanghai Credit, in the mainland China in 1999, which has been regarded as the trial practice of Chinese individual credit system. In 2002 China began to set out the framework for domestic individual credit system.The present article adopts comparative and analytical methods to study the advantages and disadvantages of individual credit systems in developed countries, and further explores the modes for developing countries to set up individual credit systems. The article also discusses some fundamental problems in the process of building and developing individual credit systems from the following three aspects: credit information department, relative laws and credit rating system.In the discussion of setting and exercising of credit information department, the present article discusses the European and American modes respectively. In the typical European mode, information sharing depends largely on the public credit information arrangements. Government involves in the management of credit information and the exchange of information is obligatory. Of course, due to the diversified social, cultural, and economic backgrounds, the setting of credit information departments is complicated in those European countries. In some circumstances, we find the coexistence of public credit information department and private credit information bureau, which may provide some clues to study the relationship between the two systems. The present comparative study aims to find out the replacement effect and extrusion effect between the public and private systems. The American mode is perfect and special. America is the earliest country in the world to have credit information department. Consequently, the division of American credit information professions is quite detailed and specified. The departments related are credit information bureau, credit analyzing mode company, and federal trade committee and some other department and organizations.The article also analyses the similarities and differences in the setting of departments and exercising modes. On one hand, there are differences in the following aspects---- the extends to which the government may involve, the scope in which the data may be collected, the starting point of loan information report and the reservation time of negative information. On the other hand, with the development of world economy, the two modes also have similar developing tendency. The present collected data result in the conclusion that "a private credit investigation department may effectively prevent the setting of public credit information department". Therefore, public credit information department set up in the developing countries may remedy the defect from private credit information bureau. At the same time, itmay compensate the government's deficiency in protecting the right of creditor, which may avoid the morality risk in loans.However, it is very difficult for the public department to make the whole system achieve Pareto optimal condition and it may do harm to the attribution of social resources. Therefore, there is a tendency for the private credit bureau to replace the public system. It is very difficult for the government to set up its fair social image, being the owner and supervisor of individual credit information department at the same time. After the Chinese government set up the nation wide individual credit information department, competitive should be introduced to reform the state-owned credit information department. Gradually, the government will change its role to be a sup...