Snooping in the Bathroom

[Randy W]

from the NY Times about how credit risks are assessed in China. My wife has several credit cards that she uses all the time, but we never had any strangers checking out our bathrooms.

 

Snooping in the Bathroom to
Assess Credit Risk in China

Extensive consumer databases are not in place for lenders to
check, but companies are scrambling to crack the credit code.

 

Banks and other lenders typically look at borrowers’ credit histories, tax forms and other financial information to determine whether they will get paid back. In China, lenders also look at their bathrooms.

Lenders have to be creative. As the economy slows, the government wants to nurture a credit culture to get Chinese families spending instead of saving.

But judging creditworthiness is tricky in a country where cash reigns, fraud is rife and even the most basic details can be difficult to verify. Despite China’s size and wealth, most people have never taken out a mortgage or used a credit card, so lenders often have little reliable information about potential borrowers.

To fill the gaps, one upstart lender, China Rapid Finance, supplements data analysis with on-the-ground spade work. The company’s investigators, in more than 90 cities, check for the number of toothbrushes or towels to determine how many people are living in a house. They look for dirty dishes in the kitchen. They take photos of a potential borrower at work to confirm employment status.