On The Forgetting Policy Of China’s Personal Credit System

Forgetting policy is the policy which regulates the credit bureaus’ keeping time of the dishonest people’s original record. In the country with credit bureaus, over 90 percent of them had provisions for restricting the reporting of adverse information after a certain period of time, but each country had different rules for the forgetting policy. In 2013, China enacted the credit reporting industry regulations. In article 16 of the regulations, that negative information may be reported by credit bureaus for up to five years until the bad behavior ended, after which it must be removed from the records made available to lenders. In the United States, the Fair Credit Reporting Act (FCRA) prescribes that negative information retained seven years commonly and a personal bankruptcy filing may be reported by credit bureaus for up to ten years, after which it must be removed from the records made available to lenders. The forgetting policy can ensure fairness of the credit market and give dishonest borrowers a chance to start again.In American, the credit reporting industry’s development and related legislation are better than China. It has set up credit bureaus much earlier than China. So its forgetting policy is desirable. However, China doesn’t have a special law on credit reporting industry until 2013. Credit reporting industry, the legal system and so on various aspects in China are not fully development and perfection, so the forgetting policy has not been effectively implemented. In 2015, China’s central bank open the barriers to entry of personal credit system for the first time, it allows commercial institutions to enter. Sesame credit management co., LTD., Tencent inquiry co., LTD. and so on. have become the first eight institutions. The non-governmental organizations in the field of personal credit, promote the marketization of China’s personal credit business and the development of China’s credit market. The development of personal credit reporting industry need have a perfect Chinese legal system and the specification on the behavior of the individual credit reporting agencies. The forgetting policy plays an important part on the perfect legal system.In addition, the domestic researches on credit investigation mainly include:the choice of the credit system model, the present development situation or direction of China’s existing credit system and the regulations on China’s credit system, etc. There are few researches on credit reporting industry structure, including the forgetting policy. So this article’s research has certain theoretical significance.This paper mainly analyzes the problem that how to make the forgetting policy of a country to play real function. In this paper, it based on the theory of forgetting policy’s model. And it builds the analysis framework on the influence factors of optimal forgetting policy. Then it uses the analysis framework to comparatively analyze the influence factors of the optimal forgetting between the United States and China. By comparing China and the United States, it conducive to explore Chinese personal credit reporting systems working mechanism and optimize China’s personal forgetting policy. Eventually this paper concludes on the model and the case’s comparison analysis. And it combines the current situation to put forward suggestions on the development of China’s personal credit system forgetting policy.This paper includes the following six parts:The first chapter is introduction. It introduced the research background, the significance of topic selection, research methods, and the full text of the research content and framework for simple and generalization, and finally, points out that the innovation of this paper and some problems which need to be studied further. The second chapter is literature review. It introduces the research about forgetting policy, and further suggests that the research significance of this article. The third chapter is the theoretical basis. It introduces the forgetting policy model. After the analysis of the model, it indicates that the factors affecting forget policy. The fourth chapter is the analysis framework of forgetting policy. It uses the basic theory of the third chapter to conclude the framework. The fifth chapter is the comparative study of China and the United States. Chapter 6 is the conclusion and policy recommendations. This chapter summarizes the main research conclusion of this paper, put forward some policy suggestions, and points out some problems which need to be studied further.In this paper, it has the following conclusions:(1) According to the analysis of the theory foundation, there are two main factors that influence the function of forgetting policy, namely the borrower’s safety degree and the degree of efforts, respectively. (2) The factors influencing residents’ safety degree are mainly the risk in the economy, mainly including purchasing power risk. Affecting residents putting high effort cost factors firstly include the allocation mechanism, namely the individual income tax collection approach. It makes the wealth distribution equilibrium and then it reduced residents’ high effort cost, thus people willing to pay high efforts. Secondly it contains the credit reporting industry regulatory system, including the government regulation, legal regulation and industry regulation. Thirdly it consists of the reward punishment mechanism, including the development of credit intermediary institutions and the consciousness of residents’ credit. (3) To make China’s personal credit system’forgetting policy work, firstly it must establish the practical basis to make the policy work, namely to avoid various risks existing in the economy, such as purchasing power risk. Secondly, it should improve the allocation mechanism, the regulatory system and the reward punishment mechanism in China.But it also exists many deficiencies:first of all, the conclusion based on the theory of logic reasoning, has not yet been statistical tests, so in the future study, need to further strengthen in terms of empirical test; Secondly, using the comparative analysis of the case study method has certain limitation, just select the personal credit system comparing with China is not universal, which would affect the results of the studv.