The scary concerns China's credit scores are raising
By now, you surely know that your credit score is a key to your your financial well being, influencing factors like the interest rate you'll be charged for a home mortgage, a cell phone plan, insurance or car loan.
But now there are new, unsettling reports about how China is using consumers' credit scores to also determine their political trustworthiness and social status.
The new credit-rating system was launched in China this past summer and is run by the Chinese e-commerce giant Alibaba (BABA) and the Chinese holding company Tencent, according to China Daily Asia. The publication also noted the new system uses a variety of data to determine credit scores, including "a person's hobbies, interaction with friends, shopping habits and lifestyle."
However, as Rick Falkvinge recently blogged at privateinternetaccess.com, the Chinese credit score isn't affected by only what you purchase.
"If you're buying things that the regime appreciates, like dishwashers and baby supplies," he wrote, "your credit score increases. If you're buying video games, your score takes a negative hit."
Other factors that can drive down a credit score on the Chinese system are no-no's such as posting political opinions online without permission or describing controversial current events -- such as the recent Chinese stock market collapse -- in ways that differ from the official government version.
"But the kicker is that if any of your friends do this -- publish opinions without prior permission, or report accurate but embarrassing news -- your score will also deteriorate," Falkvinge continued. "And this will have a direct impact on your quality of life."
Calls and emails to Alibaba's U.S. offices for comment on that report were not returned.
The American Civil Liberties Union (ACLU) is looking at the Chinese credit system and wondering if it might become a blueprint for future uses of the credit score system in America. After all, new research from the U.S. Federal Reserve, for example, has found that credit scores can help predict a person's ability to commit to a stable, long-term relationship like marriage.
However, the chances of an abusive, Chinese-style credit score/surveillance system in the U.S. in the near future are nil, according to ACLU senior policy analyst Jay Stanley. Still, he also said there does appear to be a "consistent gravitational pulls toward this kind of behavior on the part of many public and private U.S. bureaucracies, and a very real danger that many of the dynamics we see in the Chinese system will emerge here over time."
So can it happen here? Another credit industry observer has some insights.
"Many businesses in the U.S. are trying to come up with ways to use everything from rent payment histories to social media profiles to determine the creditworthiness of someone with thin or no credit," Matt Schulz, senior analyst at CreditCards.com, told CBS MoneyWatch.
"However, those plans are very much in their infancy and may never have much of an impact," he added. "Either way, we're a long way from your Facebook profile being factored into mainstream credit scoring -- and I think most Americans think that's a very good thing."