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What is China’s “Social credit score” ?

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In 2020, China will fully roll out its controversial social credit score. with Starbucks
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Under the system, both financial behaviors like “frivolous spending” and bad behaviors like
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Penalties include loss of employment and educational opportunities, as well as

transportation restrictions.

Those with high scores get perks, like discounts on utility bills and faster application
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Every citizen starts off with a score of 1,000 and the ranking reportedly goes as follows:
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850 to 955 points is a B;

840 to 600 is a C;

and any score below that is a D, which designates the score-holder as “untrustworthy.”
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While the government has not made the specific methodology used to calculate scores
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court rejected his apology until the travel mishap.

Ultimately, he had to apologize to the government again to be removed from the travel
blacklist.

For those declared “untrustworthy,” the ability to buy business-class train tickets or to lodge
at certain hotels can be rescinded.

In some cases, the opportunity for their children to  attend their preferred high school or
college may be taken away, as may employment opportunities.

Citizens who behave inconsiderately in public, like walking their dogs off-leash, can have
their dogs confiscated and be required to take an exam to get the pets back.

Although “untrustworthy” people are punished for bad scores, citizens who rank the highest in
the new system can take advantage of perks like business discounts or booking hotel rooms
without deposits.

“Under the system, the elite will gain access to better social privileges and those who rank
closer to the bottom will effectively be second-class citizens,” Newsweek reported about the
social credit score.

The effects of the US credit system are not so far from that of China’s
controversial system

In the United States, the credit bureaus do not downgrade consumers for spending on things
they deem silly or for being neglectful pet owners. But credit rankings in the US are set up in
such a way that people with more resources get more financial breaks while people with
fewer resources are routinely punished — often in ways that make little sense.

A person may end up with bad credit because he lost his job, but the fact that his credit
suffered while unemployed could effectively prevent him from landing another job.

According to the US Consumer Financial Protection Bureau, it is not illegal for employers
to deny an applicant a job offer based on information in his credit report. This makes it that
much harder for people with bad credit to get the gainful employment needed to repair their
scores.

People with poor credit may also be turned down for housing, even if the reason for the
would-be tenant’s troublesome credit history has nothing to do with her rental history.

Someone who consistently paid rent on time but wracked up credit card debt due to medical
expenses could find her housing application denied or be asked to pay a higher deposit as
punishment.

By some estimates,  one in five Americans has unpaid medical debt, and more than half of
blacks and Latinos have medical debt on their credit cards.

This not only limits rental opportunities but opportunities to buy a home, as good credit is
generally a requirement for a housing loan. And lenders, of course, have historically
created barriers for people of color pursuing home ownership.

Transportation and credit aren’t just linked in China but in the US too.

Americans with bad credit pay more for car insurance  than their counterparts with good
credit. Some banks have systematically given people of color  subprime auto loans, even if
their credit history did not justify that they pay more interest.

“Credit reports and scores are mirrors  of our manifestly two-tiered financial system, and
more broadly our system of racial wealth inequality and unequal opportunity,” Sarah Ludwig,
founder and co-director of the New Economy Project wrote in a 2015 Guardian essay. “In our
culture, indebtedness — and certainly failure to pay one’s debts — is deeply entwined with
concepts of morality. The insidious notion that our credit history speaks to our reliability as
human beings is largely taken for granted.”

The 2019 debut of the  UltraFICO score, an alternative to the traditional FICO credit score, is
being touted as a potential remedy for the inequities in the US credit system.

Rather than focus on length of credit history, for example, it takes into consideration whether
one saves regularly, maintains a $400 bank balance, avoids overdrafts, and pays bills on
time.

SEE ALSO : European luxury brands : nervous about China

UltraFico might help people of average means with short credit histories, but it is
questionable if the score will change circumstances for the underprivileged.

Given how interlinked morality, debt, and credit are in the United States, some of the concerns
about China’s new social credit score comes across as disingenuous.

Although the system certainly raises alarms — Human Rights Watch is concerned about it,
after all — the idea that the US credit system operates much more equitably is shortsighted.

(Source: Vox)

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