Chongqing Institute of Commerce has taken a lead in China by setting up the first personal credit file system for every freshman starting from the fall semester of this year.

The institute has achieved excellent outcomes since it first set up the personal credit file system for students who applied for student loans in 2001. The initiative was warmly received by banks. In 2000, 111 students from the institute received a total of 1.028 million yuan (US$124,353) in loans. In 2001, 272 students received loans totaling some 2.685 million yuan (US$324,793) through the credit file system. Both the number of students who ask for bank loans and the size of the loans have increased by 150 percent.

According to Gou Chaoli, head of the institute's admission and employment department and in charge of the project, banks' enthusiasm for providing students with loans has greatly improved since the credit file system was established, enabling even the poorest of students to now satisfy all loan requirements.

Gou Chaoli says the school has cooperated with Jincheng International Credit Rating Ltd, a professional credit rating and management organization, to develop a Personal Credit Information Register Form for the Chongqing Institute of Commerce. Besides the mandatory personal information and the relevant details of their parents or guardians, the register also records all the student's borrowing and repayment activities.

The school will track account management information on all the pertinent files. In time, the student's repayment activities and deadlines will be recorded on the form as well.

In addition, the credit management system provides students with an assessment of their credit worthiness and is capable of issuing personal credit reports. According to the school, the student personal credit file system reduces the risk to banks providing loans, as well as the cost associated with credit investigations, all of which assist students in securing loans. When students graduate from the school, their credit files will be handed over to their employers and their credit records can follow them into their professional lives.

Most students believe the establishment of personal credit file will be conducive in assisting them secure student loans. A female student who recently registered with the school described the student loans system as one offering pure credit without any guarantees or mortgages. If a student who receives a student loan lacks credit worthiness or evades paying back debts on purpose, it will have lasting consequences on their futures and discourage the enthusiasm of the bank for successive students. It may also lead to students dropping out from the school due to financial difficulties.

Some experts pointed out that the setting up of a personal credit database for university students is an important part of constructing personal credit worthiness and provides valuable credit education for university students and teaches them how their actions and ideas may affect not just them, but also those people around them. Meanwhile, an effective mechanism for punishing those who violate the credit system also needs to be established in order to protect the needs of reliable people.

(china.org.cn by Wang Qian, October 17, 2002)