When a person falls behind on a loan payment, it will naturally affect their next loan application. But matters become more complicated when loan delinquencies, contractual breaches, administrative penalties, judicial enforcement actions, and platform rule violations are all placed within a single framework of “credit.” Although these records may all appear to be related to “credit,” they are fundamentally different in nature. Loan delinquency is primarily a matter of financial risk; contractual breach is primarily a matter of civil liability; an administrative penalty is primarily a matter of violating administrative law; judicial enforcement primarily concerns compliance with legally binding instruments; and platform violations primarily concern the governance of platform rules. All of these may constitute negative records, but the fact that they are negative does not mean they should all be interpreted as evidence that “this person is untrustworthy,” still less as proof that “this person has bad character.”

This is precisely the issue that China must guard against as its credit economy develops: once the concept of credit becomes overly expansive, specific records of conduct from different fields can easily be blended into a vague label attached to a person’s character.

The history of credit reporting in the United States provides a useful point of reference. Early American credit reporting also relied on character, reputation, lifestyle, and local opinion. Put simply, creditworthiness was judged by assessing a person’s “character.” Later, however, as the market expanded, credit-reporting data accumulated, legal regulation improved, and scoring technologies developed, mainstream financial credit reporting gradually shifted toward standardized records such as account status, debt burden, delinquencies, and repayment history.

In other words, the modernization of credit assessment does not mean incorporating more character judgments into credit. It means limiting credit assessment to records of conduct that are more specific, more verifiable, and more closely related to risk.

I. Early Credit Reporting: “Character Judgments” in a Market of Strangers

In a society of acquaintances, determining whether someone can be trusted with a loan often requires no complex data. You know where the person lives, what they normally do, what kind of reputation they have, and whether they have ever failed to repay a debt. Among acquaintances, credit depends on reputation and personal relationships.

In the nineteenth century, however, the American market expanded rapidly, and transactions were no longer confined to local circles of acquaintances. Merchants might conduct business with people far away, while creditors increasingly dealt with strangers. A new question therefore arose: if I do not know you, how can I tell whether you will repay your debt?

Today, we can examine accounts, transaction records, debt levels, and histories of delinquency. In early America, however, such standardized data systems had not yet been established. Credit-reporting agencies therefore began collecting information about borrowers on behalf of creditors, including their property, business conditions, local reputation, personal character, lifestyle, and even neighborhood gossip.[1]

In other words, early credit reporting transformed the reputation-based judgments of an acquaintance society into written reports that could be sold to distant creditors.

II. Why Did Early Credit Assessment Become a Matter of “Judging Character”?

Early credit reporting became moralized not because credit reporting inherently required an assessment of morality, but because reliable data were unavailable at the time.

There were no unified account records, no long-term repayment histories, and no information systems capable of sharing data across regions. Creditors could therefore ask only rougher questions: Is this person diligent? Do they exercise restraint? Do they have undesirable habits? Do they have a good local reputation? Do they conduct business honestly?

Today, these questions may appear to be assessments of character, but at the time they were believed to be related to repayment risk. People assumed that someone who lacked restraint, stability, or diligence would also be more likely to fail to repay a debt on time.

Early credit reports were therefore unlike modern credit reports, which consist primarily of accounts and figures. They were more like brief biographies of a person’s character. Rather than merely recording whether someone had ever been delinquent, they sought to determine whether that person was fundamentally worthy of trust.

This was the moralization of early credit: credit was not merely about debt, but about the person as a whole.

The problem lay precisely here. Local rumors could be inaccurate, personal impressions could be biased, and so-called “reputation” could be shaped by social prejudices involving class, gender, race, religion, and other factors. Once such evaluations were entered into credit reports, they could be packaged as “credit facts” and affect a person’s opportunities in the marketplace.[2]

III. Modern Financial Credit Reporting: From “Evaluating the Person” to “Recording Conduct”

As consumer credit became increasingly widespread in the United States and financial markets continued to expand, local reputation and hearsay could no longer support credit decisions on a nationwide scale.

Banks, retailers, and financial companies needed information that was faster, more standardized, and easier to compare. The credit-reporting system therefore gradually evolved from small local agencies into nationwide databases, and the focus of credit assessment began to change.[3]

The question used to be: Does this person have good character?

The question later became: Has this person made repayments on time?

Previously, the relevant factors were reputation, lifestyle, and local opinion.

Later, the focus shifted to account status, debt burden, delinquencies, repayment history, and records of credit inquiries.

This was the “de-moralization” of mainstream financial credit reporting. It should be noted, however, that de-moralization does not mean that credit is entirely neutral, nor does it mean that credit systems no longer evaluate people. It simply means that mainstream financial credit reporting no longer directly assesses whether someone is a “good person.” Instead, it records whether the person has fulfilled their obligations within financial relationships.

Modern credit reporting has not ceased to evaluate people; it has simply adopted a different method of evaluation. Rather than using the language of character, it evaluates people through records of conduct and probabilities of risk.

IV. How Did Law and Technology Change Credit Assessment?

The transformation of American credit reporting resulted not only from market development, but also from legal regulation and technological progress.

On the one hand, the law began to restrict the use of certain identity-related factors in credit decisions. In the past, for example, women applying for credit could face restrictions because of their marital status or family role. Later, the Equal Credit Opportunity Act and related rules restricted credit discrimination based on factors such as sex and marital status. This helped redirect credit assessment toward information genuinely related to the risk of nonperformance, such as income, debt, and repayment history.[4]

On the other hand, credit-scoring technologies emerged. Credit scoring compresses complex account records into a single score or risk category, enabling financial institutions to assess risk more quickly, consistently, and at lower cost.[5]

This further accelerated the shift from narratives about character to calculations of risk.

Technology, however, is not inherently fair. In the past, a credit report might have stated that “this person is of poor character.” Today, a system may simply assign the person a low score. The language and format have changed, but the function of screening remains.

V. Credit Did Not Disappear; It Was “Diverted into Different Channels”

One of the most common misunderstandings about the modernization of American credit reporting is the belief that it has completely eliminated moral judgment. In fact, it has not.

Mainstream financial credit reporting has increasingly centered on records of contractual performance. Yet in areas such as housing, employment, insurance, and background checks, consumer reports may still contain extensive information used to determine a person’s eligibility.[6]

When renting a home, for example, a landlord may review a tenant-screening report. The report may contain credit history, rent-payment records, eviction records, and civil or criminal records. The problem is that an eviction record does not necessarily mean that a tenant deliberately breached an agreement. It may have resulted from a dispute, settlement, dismissal of the case, or even an incomplete record. Once it enters a screening system, however, it may be reduced to the conclusion that “this person presents a risk.”

The same applies to employment. Employers may examine criminal records, educational backgrounds, professional licenses, and employment histories. Certain criminal records may genuinely be relevant to the risks associated with particular positions. But if an employer fails to distinguish between the nature of the offense, how long ago it occurred, and its relevance to the position, and instead excludes anyone with any record, a single event from the past can become a long-term label.

American credit reporting therefore did not move from moralization to complete de-moralization. Instead, an institutional division occurred. On one side is mainstream financial credit reporting, which primarily assesses lending risk. On the other side are specialized consumer reports, which continue to perform eligibility-screening functions in housing, employment, insurance, and other contexts.

Evaluation has not disappeared. It has merely changed its location, form, and language.

VI. Implications for China: The Development of the Credit Economy Must Have Boundaries

As the market economy, online transactions, and the platform economy develop, the scope of transactions continues to expand, and many transactions no longer take place among acquaintances. Businesses, platforms, financial institutions, consumers, and government departments all require more verifiable information to reduce transaction costs, identify the risk of nonperformance, and improve regulatory efficiency. The 2025 Opinions on Improving the Social Credit System, issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council, also explicitly states that the social credit system is a foundational institution of the market economy. It calls for the establishment of a social credit system that covers all types of entities, operates under unified institutional rules, and is jointly developed, shared, and utilized, while supporting the unified national market and high-quality development.[7]

The construction of a credit system therefore has a legitimate rationale. Financial credit reporting can help banks assess borrowers’ risks; corporate credit information can help counterparties understand the condition of a business; and the disclosure of administrative penalties and judicial enforcement information can improve regulatory transparency and encourage compliance with legal obligations.

The problem, however, is that the construction of a credit system must not turn “credit” into an excessively broad concept.

Records of different kinds may be used, but they must not be used as though they were equivalent. Financial delinquencies, contractual breaches, administrative penalties, judicial enforcement actions, and platform violations correspond to different risks, responsibilities, and governance contexts. They cannot all be simplistically interpreted as evidence that “this person is untrustworthy.”

This is precisely the lesson offered by the history of American credit reporting: the direction of modern credit assessment is not to incorporate more judgments about character, but to confine credit to records of conduct that are specific, relevant, and verifiable.

The development of China’s credit economy should therefore observe at least three boundaries.

First, the boundary of purpose. Credit information should serve specific contexts and should not be used arbitrarily across different contexts. Financial credit reporting should be used to assess lending risk; information about administrative penalties should be used for administrative supervision; judicial enforcement information should be used to promote compliance with legally binding instruments; and records of platform violations should be used to maintain order on the platform.

Second, the boundary of information. Information included in credit assessments should be related to the specific risk concerned. Lifestyle, identity characteristics, and general moral conduct should not be incorporated into credit judgments.

Third, the boundary of procedure. Whenever credit information may affect lending, housing, employment, business operations, or public services, individuals and entities should be guaranteed the rights to access the information, raise objections, request corrections, and seek remedies.

In a word, the central task in developing a credit economy is not to incorporate every negative record into the concept of credit, but to distinguish between records of specific conduct and judgments about a person’s overall character.

Conclusion: Credit Is Not Better When It Is Broader, but When It Is Clearer

The history of American credit reporting shows that credit institutions originally contained a strong element of character assessment. Later, mainstream financial credit reporting gradually shifted from “judging character” to “examining records of performance,” and from character judgments to risk assessment.

This does not mean, however, that credit assessment has become entirely neutral, nor does it mean that moral judgments have completely disappeared. Modern credit increasingly affects people’s opportunities through records, scores, models, and reports.

What truly matters, therefore, is not making credit omnipresent, but ensuring that it is used where it properly belongs.

Credit can help markets reduce risk, but it must not become an all-purpose tool for judging people.

Credit can record specific acts of performance or nonperformance, but it must not be casually elevated into a judgment about character.

Credit can serve specific contexts, but it must not expand without limit across different contexts.

In a word, the central aim of a credit system is not to make the concept of credit ever broader, but to make its boundaries ever clearer.

References

[1] Josh Lauer, Creditworthy: A History of Consumer Surveillance and Financial Identity in America, 2017.

[2] Jonathan Weinberg, “Know Everything That Can Be Known about Everybody: The Birth of the Credit Report,” 2018.

[3] Mark Furletti, “An Overview and History of Credit Reporting,” 2002.

[4] Consumer Financial Protection Bureau, “Equal Credit Opportunity Act.”

[5] Federal Reserve, “Report to the Congress on Credit Scoring,” 2007.

[6] CFPB, “Tenant Background Checks Market Report,” 2022.

[7] General Office of the Communist Party of China Central Committee and General Office of the State Council, Opinions on Improving the Social Credit System, 2025.

Note: The author is Shanli Zhang. He is a doctoral student at the Law School of Shandong University. This article is a popularized version of the working paper titled From “Character” to “Risk”: Limited De-moralization, Eligibility Screening, and Boundary Governance in the History of American Credit Reporting. WeChat: 18811157736. Comments and corrections are welcome.

As the economy and society continue to develop and the credit system is gradually improved, credit repair has appeared with increasing frequency in policy discussions and public discourse. Public attention has risen significantly, particularly following the recent introduction by the People’s Bank of China of policy arrangements concerning “one-time credit repair.”[1][2] At the same time, however, there have been widespread misunderstandings that conflate “financial credit repair” with “public credit repair.” To address this confusion, this article uses a “two-track, three-pathway” framework to systematically explain the differences between financial credit repair and public credit repair in terms of their governing authorities, applicable parties, and repair mechanisms, thereby helping the public avoid conceptual confusion when interpreting and using these policies.

I. Background

China began gradually establishing its social credit system in the early 2000s and has continued to improve it alongside economic and social development. On this basis, credit repair has progressively developed into a “two-track, three-pathway” framework: financial credit repair led by the People’s Bank of China, together with the National Development and Reform Commission pathway and the market regulation pathway within public credit repair. This framework is shown in Figure 1:

Figure 1 Categories of Credit Repair in China

As shown in Table 1, financial credit repair is primarily led by the People’s Bank of China and constitutes an important component of China’s financial infrastructure, consistent with internationally accepted principles of credit-reporting governance. It focuses on correcting financial-behavior data concerning individuals and enterprises, such as records of overdue loans and credit-card payments. It generally affects access to financial services and restores financial credit through information correction or updating, adjustments to display rules, or removal upon expiration in accordance with laws and regulations. Public credit repair, by contrast, is led by authorities including the National Development and Reform Commission and the State Administration for Market Regulation. It focuses on social governance and compliance constraints and generally restores an entity’s social credit by ending the public disclosure of relevant information and lifting restrictions after the entity has corrected its misconduct and fulfilled its obligations. Both systems emphasize providing an “opportunity to correct mistakes,” but they differ in their scope of application and the boundaries of their respective mechanisms.

Table 1 The “Dual-Track System”: The Same Term with Different Meanings

II. The Background, Development, and Authoritative Policy Positions of the Three Major Credit Repair Systems

China’s credit repair system is administered by multiple government departments and primarily comprises the financial credit system, the public credit system led by the National Development and Reform Commission, and the market regulation system led by the State Administration for Market Regulation. Although all three systems involve credit repair, they differ in their backgrounds, development paths, and authoritative policy positions.

(I) Financial Credit Repair by the People’s Bank of China: From “Absolute Recordkeeping” to “Policy-Based Relief”

1. Background and Origins, 1999–2013

China’s financial credit-reporting system began relatively early. A credit-reporting administration was established as early as 1999, primarily to address information asymmetry in financial markets and assist financial institutions in assessing borrowers’ credit risks. During this period, the credit-reporting system was centered on “faithful recordkeeping,” requiring financial institutions to record the credit histories of individuals and enterprises fully and accurately in order to prevent financial risks. The concept of credit repair had not yet been clearly defined, and the system focused solely on the objective recording and management of credit information.

2. Development Path, 2013–2024

The promulgation of the Regulation on the Administration of the Credit Reporting Industry in 2013 marked a new stage in the development of China’s financial credit system. The Regulation provides that adverse personal information must be retained for five years from the date on which the relevant adverse conduct or event ends and must be deleted in accordance with the law after the five-year period expires.[3] This is not equivalent to the “arbitrary deletion of records”; rather, it is a rules-based removal process following the expiration of a statutory retention period. Within this framework, “active repair” in the traditional sense is reflected primarily in mechanisms such as information correction, dispute resolution, and adjustments to display rules.

3. Authoritative Policy Position, 2025

On October 27, 2025, Pan Gongsheng, Governor of the People’s Bank of China, announced that the central bank would implement a “one-time personal credit relief policy” in early 2026.[4] The policy is primarily directed at borrowers who defaulted on small consumer loans because of the pandemic or other force majeure events but have since fulfilled their repayment obligations. The relevant default information of eligible borrowers will be subject to policy-based adjustment in the credit-reporting system in accordance with applicable rules. On December 22, 2025, the People’s Bank of China issued the Notice on Arrangements for Implementing the One-Time Credit Repair Policy, further clarifying the applicable conditions and operational arrangements. It should be emphasized that the policy provides for eligible overdue information to be “excluded from display in accordance with applicable rules,” rather than permitting “paid deletion” or “whitewashing.” It is also a policy-based relief arrangement that eligible individuals may enjoy automatically without submitting an application.

(II) Public Credit Repair by the National Development and Reform Commission: From “Across-the-Board Sanctions” to “Tiered and Classified Restructuring”

1. Background and Origins, 2014–2018

With the issuance of the Planning Outline for the Development of the Social Credit System (2014–2020) in 2014, China began constructing a credit system covering the whole of society.[5] During this period, the Chinese government focused on promoting social integrity and establishing a cross-departmental joint disciplinary mechanism against untrustworthy conduct that covered the whole of society. By publicly disclosing information about untrustworthy conduct, restricting certain rights and interests of untrustworthy entities, and implementing disciplinary measures, the government sought disciplinary measures, the government sought to compel such entities to comply with laws and regulations and fulfill their social responsibilities.

Public credit repair was not clearly defined at the outset. Instead, the emphasis was placed on sanctioning and recording untrustworthy conduct. Once such conduct was confirmed, it would be recorded and publicly disclosed on the Credit China website. Repair mechanisms during this stage were relatively preliminary and relied mainly on untrustworthy entities applying for removal from a “blacklist” after proactively correcting their misconduct.

2. Development Path, 2019–2024

After 2019, as the social credit system was further improved, the National Development and Reform Commission began gradually adjusting the measures used to sanction untrustworthy conduct and introduced more flexible credit repair models. In particular, a repair model under which an application could be made once the misconduct had been corrected began to be implemented. This model allowed untrustworthy entities, after proactively correcting their conduct and fulfilling their statutory obligations, to apply to the relevant authorities to end the public disclosure of the relevant information and lift associated restrictions.

3. Authoritative Policy Position, 2025

On November 20, 2025, the National Development and Reform Commission issued the Measures for the Administration of Credit Repair, which will formally take effect on April 1, 2026.[6] The Measures provide more systematic and detailed rules for public credit repair, clearly specifying the repair standards and time limits applicable to different records of untrustworthy conduct. They also introduce, for the first time, a “tiered and classified” management model for information concerning untrustworthy conduct, under which different repair periods are established according to the seriousness of the misconduct. The introduction of this policy not only improves the precision of public credit repair administration but also provides untrustworthy entities with fairer opportunities.

(III) Credit Repair by the State Administration for Market Regulation: An Important Component of the Public Credit System

1. Background and Origins, 2014–2021

The credit repair policies of the State Administration for Market Regulation constitute an important part of the public credit system and are specifically directed at market entities. In the early stages, market regulators supervised enterprises through instruments such as the List of Enterprises with Abnormal Operations and the List of Seriously Untrustworthy and Unlawful Entities. The aim was to increase overall public awareness of creditworthiness and compliance with the law through transparent information disclosure and disciplinary mechanisms.

2. Development Path, 2021–2024

In 2021, the State Administration for Market Regulation issued the Measures for the Administration of Credit Repair in Market Regulation, marking the institutionalization and standardization of credit repair mechanisms in the field of market regulation.[7] The Measures provided enterprises with clear pathways for credit repair, including applications for removal from the List of Enterprises with Abnormal Operations and the termination of untrustworthiness-related management measures. At the same time, the State Administration for Market Regulation accelerated the development of a “national unified platform” and promoted the “one-stop credit repair service” reform, simplifying repair procedures and improving the efficiency with which enterprises could restore their credit.

3. Authoritative Policy Position, 2025

On December 25, 2025, the State Administration for Market Regulation will implement the latest revised version of the Measures for the Administration of Credit Repair in Market Regulation. The revision further expands the scope of credit repair and establishes temporary credit repair arrangements for “enterprises undergoing reorganization or settlement.” During the implementation of a reorganization plan or settlement agreement, an enterprise may apply for temporary credit repair by submitting the relevant ruling or other legal documents issued by a people’s court. The relevant information concerning untrustworthy conduct may then be temporarily concealed, and management measures that could affect the implementation of the reorganization or settlement may be lifted.[8] This measure helps reduce the prolonged effects of credit sanctions, supports enterprises in resuming operations and participating in market competition, and is consistent with the policy objective of improving the business environment.

III. A Comprehensive Comparison: The Logic and Core Differences Among the Three Major Credit Repair Pathways

As shown in Table 2, although China’s two categories of credit repair—financial credit repair and public credit repair—both serve the objective of restoring the credit of entities that have engaged in untrustworthy conduct, they differ in their underlying logic, scope of application, repair pathways, and implementation mechanisms. Financial credit repair is concentrated primarily in the financial sector and mainly concerns the correction of financial data. Public credit repair led by the National Development and Reform Commission focuses on social compliance and primarily addresses the correction of untrustworthy conduct. Credit repair under market regulation, led by the State Administration for Market Regulation, focuses on the compliance of enterprise conduct, particularly the restoration of enterprises’ operating qualifications and market credit in the commercial sphere.

Table 2 A Comprehensive Comparison of the Two Categories of Credit Repair

(I) Financial Credit Repair

Financial credit repair led by the People’s Bank of China follows the principle that “recording itself constitutes a sanction.” Financial institutions record customers’ defaults in credit reports, while the core of repair lies in restoring the credit eligibility and borrowing capacity of the relevant individuals or entities through information correction or updating, adjustments to display rules, or removal upon expiration in accordance with laws and regulations, rather than arbitrarily “deleting history.”

Financial credit repair is driven primarily by two factors. The first is policy-based relief under particular circumstances, such as relief arrangements introduced in response to the pandemic or other force majeure events, under which information relating to eligible defaulters may be subject to adjustments in its display in accordance with applicable rules. The second is automatic removal following the expiration of the statutory retention period, meaning that adverse financial records are removed from credit reports in accordance with the law after five years.

Financial credit repair applies to credit records submitted by financial institutions and commonly concerns defaults involving small consumer loans, outstanding credit-card balances, and similar obligations. The principal purpose of repair measures is to restore the financial credit of individuals and enterprises in accordance with laws and regulations, enabling them to regain access to loans, credit cards, and other financial services.

(II) Public Credit Repair

1. Public Credit Repair Led by the National Development and Reform Commission

Public credit repair covers the field of social credit, including information concerning the social conduct of individuals and enterprises, administrative penalties, and related matters. Unlike financial credit repair, which focuses on credit-reporting data, public credit repair places greater emphasis on social compliance and lawful conduct and seeks to restore an entity’s social credit status after it has corrected its misconduct and fulfilled its obligations.

The governance logic of public credit repair is that “public disclosure itself constitutes a sanction.” Once the conduct of an untrustworthy entity is recorded and publicly disclosed, the entity becomes subject to social and regulatory constraints. After correcting its misconduct and fulfilling its statutory obligations, the entity may apply, in accordance with applicable rules, to end the public disclosure, lift the restrictions, and restore its eligibility to engage in the relevant activities.

2. Credit Repair under Market Regulation Led by the State Administration for Market Regulation

Credit repair under market regulation is an important component of the public credit repair system and focuses on credit repair at the enterprise level. Led by the State Administration for Market Regulation, this pathway principally operates through regulatory lists such as the List of Enterprises with Abnormal Operations and the List of Seriously Untrustworthy and Unlawful Entities. It uses credit repair mechanisms to help enterprises restore their market-access qualifications and credit status.

Credit repair under market regulation follows the principle that “listing itself constitutes a sanction.” Once an enterprise is included on a list of abnormal operations or serious untrustworthiness, it becomes subject to restrictions arising from the relevant regulatory measures. The core of the repair process is the enterprise’s removal from the relevant list in accordance with laws and regulations after it has fulfilled its statutory obligations or completed the required corrective measures, thereby restoring its qualification to conduct normal business activities in the market.

The drivers of credit repair under market regulation include the fulfillment of statutory obligations: after correcting unlawful conduct and completing the required rectification, an enterprise may apply for removal from the relevant list. In addition, mechanisms such as a “green channel” for bankruptcy reorganization may provide more convenient credit repair arrangements for particular types of enterprises, thereby reducing the prolonged effects of credit sanctions.

IV. Challenges and Public Misunderstandings Concerning Credit Repair

Although the advancement of credit repair policies has positive implications for strengthening social integrity and economic vitality, public misunderstandings remain a challenge in their practical implementation. Many people confuse financial credit repair with public credit repair and mistakenly believe that all types of records concerning untrustworthy conduct can be eliminated by applying for their “deletion” or “whitewashing.” In reality, the two differ in both their scope of application and the actions taken to achieve repair. Financial credit repair focuses on the correction of credit-reporting information and adjustments to display rules, whereas public credit repair focuses on ending public disclosure and lifting restrictions after misconduct has been corrected. Such misunderstandings may also foster a gray industry operating under the name of “credit-report repair,” in which unscrupulous organizations charge substantial fees while promising to “erase records.” Such promises are generally incapable of being lawfully fulfilled and may instead result in fraud and legal disputes, thereby disrupting the proper operation of the credit repair system.

In addition, financial credit repair and public credit repair are led by different government authorities, including the People’s Bank of China, the National Development and Reform Commission, and the State Administration for Market Regulation. Because the boundaries between the systems and their points of access are not sufficiently intuitive, members of the public may repeatedly seek advice or submit applications to different departments. Differences in the standards or explanations applied by those departments may even lead to procedural mismatches, increasing both time and administrative costs and reducing the efficiency of policy implementation.

The government therefore needs to further improve clarity in both information disclosure and policy implementation, ensuring that the public can properly understand and use these policies. Particular emphasis should be placed on explaining “what can be repaired, which authority should be contacted, and how the process works.” The applicable scope, application channels, required materials, and time limits for different types of repair should be clearly specified, while cross-departmental information sharing and procedural integration should be advanced. At the same time, continuing public education and risk warnings are needed to reduce misunderstanding and misuse.

Finally, if the definition and scope of credit repair are not clearly delineated, the financial credit system may be adversely affected, particularly through the weakening of the risk-warning function of “faithful recordkeeping.” One of the major objectives of financial credit reporting is to prevent financial risks and protect financial institutions from excessive risk exposure. If repair is excessive or abused, the credibility of the credit-reporting system will be undermined, potentially affecting the stability of financial markets. Maintaining the rigor and transparency of repair mechanisms and ensuring that they apply only to eligible individuals and entities in accordance with laws and regulations are therefore essential to the proper functioning of the credit system.

Overall, credit repair policies must maintain a careful balance in their implementation. They should provide sufficient repair opportunities to help entities that have engaged in untrustworthy conduct reintegrate into society, while also preventing abuse and improper practices and ensuring that repair procedures remain fair and transparent.

V. Conclusion

The “dual-track, three-pathway” credit repair system led by the People’s Bank of China, the National Development and Reform Commission, and the State Administration for Market Regulation applies to different parties and operates through different mechanisms. Financial credit repair focuses primarily on the presentation and updating of credit-reporting information. Public credit repair focuses on ending public disclosure and lifting restrictions after misconduct has been corrected. Credit repair under market regulation focuses on removal from regulatory lists and the restoration of market access. Together, these three repair pathways reflect an equal emphasis on sanctions and rehabilitation: while maintaining necessary constraints, they provide a route back for entities that have corrected their misconduct and fulfilled their obligations, thereby improving governance effectiveness and public trust.

Looking ahead, the further improvement of credit repair mechanisms requires clearer institutional distinctions among the different types of repair pathways in order to prevent confusion. Cross-departmental coordination should also be strengthened, information sharing and procedural integration should be promoted, and the efficiency of repair should be improved. Public education and risk warnings should be treated as long-term priorities to reduce misunderstanding and abuse. The objective of credit repair is to ensure that, after correcting their misconduct and fulfilling their obligations, entities that have engaged in untrustworthy conduct can restore their credit through legitimate channels and continue participating in social and economic activities, maintaining a balance between “compassion and order.”

References

[1] People’s Bank of China, “Notice of the People’s Bank of China on Arrangements for Implementing the One-Time Credit Repair Policy” [EB/OL], December 22, 2025, available at https://www.pbc.gov.cn/goutongjiaoliu/113456/113469/2025122116371667030/index.html (last accessed December 24, 2025).

[2] People’s Bank of China, “Questions and Answers with the Press Concerning the Notice of the People’s Bank of China on Arrangements for Implementing the One-Time Credit Repair Policy” [EB/OL], December 22, 2025, available at https://www.pbc.gov.cn/goutongjiaoliu/113456/113469/2025122116421625696/index.html (last accessed December 24, 2025).

[3] State Council, Regulation on the Administration of the Credit Reporting Industry, State Council Order No. 631, promulgated January 21, 2013, effective March 15, 2013, Article 16.

[4] Xinhua News Agency, “The People’s Bank of China Is Studying the Implementation of a One-Time Personal Credit Relief Policy” [EB/OL], October 27, 2025, available at http://www.news.cn/fortune/20251027/39190dbb704141a197ad9e8e7213b754/c.html (last accessed December 24, 2025).

[5] State Council, “Notice of the State Council on Issuing the Planning Outline for the Development of the Social Credit System (2014–2020),” State Council Document No. 21 [2014], June 14, 2014 [EB/OL], available at https://www.gov.cn/gongbao/content/2014/content_2711418.htm (last accessed December 24, 2025).

[6] National Development and Reform Commission, Measures for the Administration of Credit Repair [EB/OL] (PDF), available at https://www.ndrc.gov.cn/xxgk/zcfb/fzggwl/202511/P020251126424276238205.pdf. The document states, among other matters, that “these Measures shall take effect on April 1, 2026, and the Measures for the Administration of Credit Information Repair Following the Correction of Untrustworthy Conduct (Trial) shall be repealed” (last accessed December 24, 2025).

[7] State Administration for Market Regulation, “Notice of the State Administration for Market Regulation on Issuing the Measures for the Administration of Credit Repair in Market Regulation,” SAMR Credit Regulation Document No. 3 [2021], issued July 30, 2021, effective September 1, 2021 [EB/OL], available at https://www.gov.cn/zhengce/zhengceku/2021-08/04/content_5629304.htm (last accessed December 24, 2025).

[8] State Administration for Market Regulation, Measures for the Administration of Credit Repair in Market Regulation, State Administration for Market Regulation Order No. 107, promulgated November 21, 2025, effective December 25, 2025 [EB/OL], available at https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/fgs/art/2025/art_02b9d3e6f31a4cc38079901ab49994d5.html (last accessed December 24, 2025).

Note: The author is Shanli Zhang. He is a doctoral student at Shandong University. The original title of this article was “A Comprehensive Analysis of China’s Credit Repair System: The ‘Dual-Track’ Model of Financial Credit and Public Credit.” ItDual-Track’ Model of Financial Credit and Public Credit.” It is the full-text version of a roundtable presentation delivered at the “Eighth Credit Rule of Law · Shaoshan Luntang Forum,” held at Xiangtan University on December 21, 2025. WeChat: 18811157736. Comments and corrections are welcome.

Against the backdrop of the continued development and deepening of China’s social credit system, public concern over issues relating to “credit” has reached an unprecedented level. As of December 30, 2025, a total of 8,485,046 dishonest persons subject to enforcement were publicly listed nationwide.[1] However, a common misconception is to conflate “deadbeat debtors” in the field of judicial enforcement—the legal term being “dishonest persons subject to enforcement”—with ordinary credit problems such as overdue bank payments, leading people to assume that all forms of credit impairment can be addressed through a unified credit restoration mechanism. This conceptual confusion may not only cause individuals or enterprises to “knock on the wrong door and apply the wrong remedy” when seeking relief, but also create fertile ground for gray-market businesses operating under the banner of “credit report repair.”

I. The Institutional Origin and Constitutive Elements of “Deadbeat Debtor” Status: A Sanctioning Status Arising from Judicial Enforcement

Before discussing how such status may be “restored,” it is first necessary to clarify the essential nature of a “deadbeat debtor.” It is neither a simple social label nor the result of a credit score. Rather, it is a sanctioning status arising from a specific judicial enforcement procedure and carrying a clear legal definition. Understanding its distinctive judicial origin is an indispensable foundation for examining all subsequent questions concerning restoration.

(I) Legal Definition and Origin of “Deadbeat Debtor” Status

The widely used expression “deadbeat debtor” is not a legal term. Its formal designation within the legal framework is “dishonest person subject to enforcement.” This system does not originate from the banking credit reporting system or from the broader social credit system. Instead, it derives directly from the Civil Procedure Law of the People’s Republic of China and the Several Provisions of the Supreme People’s Court on the Publication of Information Concerning the List of Dishonest Persons Subject to Enforcement. It constitutes a judicial sanction imposed during compulsory enforcement proceedings by a people’s court in response to specified forms of dishonest conduct.

The central purpose of establishing this system is clear: by using credit-based sanctions as a powerful deterrent and imposing pressure on various aspects of a dishonest person’s life, the system seeks to compel that person to voluntarily perform the obligations determined in an effective legal instrument. It thereby aims to address the long-standing problem of “difficulties in enforcement” that has troubled judicial practice and to firmly safeguard the authority of judicial decisions.

(II) Statutory Circumstances for Inclusion on the Dishonesty List

The legal procedure for determining that a person subject to enforcement is a “deadbeat debtor” and placing that person on the dishonesty list is highly cautious. Two indispensable preconditions must be satisfied simultaneously: first, there must be an effective legal instrument, such as a judgment or ruling; and second, the person subject to enforcement must have committed a specific form of dishonest conduct prescribed by law.

In other words, the mere existence of a debt does not directly result in a person being classified as a “deadbeat debtor.” The key question is whether, during the enforcement stage, the person has engaged in subjectively malicious and dishonest conduct. Article 1 of the Several Provisions of the Supreme People’s Court on the Publication of Information Concerning the List of Dishonest Persons Subject to Enforcement expressly identifies six principal categories of dishonest conduct:

1. Refusing to perform the obligations determined in an effective legal instrument despite having the ability to do so;

2. Obstructing or resisting enforcement by means such as fabricating evidence, violence, or threats;

3. Evading enforcement through sham litigation, sham arbitration, concealment or transfer of assets, or other means;

4. Violating the property reporting system;

5. Violating an order restricting consumption;

6. Refusing, without legitimate reason, to perform an enforcement settlement agreement.

(III) The Critical Distinction Between “Dishonesty” and “Inability to Perform”

To prevent the excessive application of sanctions, judicial policy has long and repeatedly emphasized the need to strictly distinguish “dishonest persons subject to enforcement” from “persons subject to enforcement who genuinely lack the ability to perform,” namely, those who are “incapable of performance.” The latter may have temporarily or permanently lost the ability to perform because of objective circumstances, such as corporate bankruptcy or an individual’s loss of working capacity. Such inability does not automatically constitute “dishonesty” in the legal sense.

This important distinction clearly demonstrates that the target of the dishonest-persons-under-enforcement system is subjectively malicious and objectively dishonest conduct involving “non-performance” or “evasion of performance.” Its institutional logic emphasizes responsibility for conduct rather than punishment for economic failure itself.

Precisely because “deadbeat debtor” status constitutes a judicial sanction, the legal consequences faced by such persons extend far beyond ordinary credit-record issues. A cross-departmental and cross-sectoral network of coordinated sanctions has therefore been established.

II. The Principal Consequences of “Deadbeat Debtor” Status: The Coordinated Sanctions Mechanism

The coordinated sanctions mechanism is the most deterrent component of the system governing dishonest persons subject to enforcement. Based on the principle that “dishonesty in one area results in restrictions everywhere,” the mechanism uses information sharing and coordinated supervision among people’s courts, government departments, financial institutions, industry associations, and other entities to transform an otherwise isolated judicial sanction into a society-wide network of restrictions. This substantially increases the cost of dishonest conduct, minimizes the room available for dishonest persons to operate, and compels them to perform their legal obligations.

(I) Operation of the Coordinated Sanctions Mechanism

The mechanism operates in a straightforward manner. People’s courts at all levels enter information concerning dishonest persons subject to enforcement into the unified database maintained by the Supreme People’s Court and notify “relevant government departments, financial regulatory authorities, financial institutions, public institutions performing administrative functions, industry associations, and other entities.” Upon receiving such information, these entities impose corresponding restrictive measures on the listed persons in accordance with the laws, regulations, and relevant rules governing their respective fields.

(II) Principal Sanctions

Once an individual or enterprise is included on the list of dishonest persons subject to enforcement, it will face a series of severe coordinated sanctions, including but not limited to the following:

• Restrictions on financing and credit: When reviewing loan applications, processing credit card applications, and providing other services, financial institutions may impose strict restrictions or directly refuse to provide the relevant financial services, thereby effectively cutting off access to financing.
• Restrictions on market access and qualification recognition: Dishonest persons subject to enforcement may be strictly restricted or directly excluded from key areas such as government procurement, bidding and tendering, administrative approvals, government support, and qualification recognition.
• Restrictions on high-value consumption and consumption not necessary for daily life or work: This is the sanction most familiar to the public. Prohibited activities include traveling by airplane, occupying soft-sleeper berths on trains, or traveling in second-class or higher cabins on ships; engaging in high-value consumption at star-rated hotels, nightclubs, golf courses, and similar venues; and enrolling one’s children in high-fee private schools.
• Restrictions on holding important positions: Dishonest persons subject to enforcement may be prohibited from serving as directors, supervisors, or senior executives of companies, as well as legal representatives of public institutions, senior executives of financial institutions, and holders of other important positions.

In the face of such severe coordinated sanctions, seeking credit restoration inevitably becomes the preferred course of action for dishonest persons or entities. However, the path to restoration is not unobstructed. It is first necessary to clearly define the boundaries between the judicial system and the various credit restoration systems.

III. Clarifying the Boundaries: Fundamental Differences Between Judicial Sanctions and the Three Categories of Credit Restoration Systems

The greatest public misunderstanding concerning credit restoration lies in the conflation of systems governed by different authorities, based on different regulatory rationales, and operating through different restoration mechanisms.

(I) Overview of China’s “Dual-Track, Three-Pathway” Credit Restoration System

As China’s credit restoration system has developed, it has gradually formed a clear “dual-track, three-pathway” structure. The “dual tracks” refer to financial credit restoration and public credit restoration. The public credit restoration track is further divided into two principal pathways: one coordinated by the National Development and Reform Commission and applicable across society as a whole, and the other led by the State Administration for Market Regulation and focused on business entities.

(II) Comparison of the Core Differences Among the Four Systems

To understand the restoration pathway available to a “deadbeat debtor,” it is first necessary to distinguish the judicial enforcement system from the three principal credit restoration systems. Table 1 provides an in-depth comparison across four core dimensions:

Table 1. Comparison of the Four Systems Related to Credit Restoration

The fundamental differences among these systems in terms of responsible authorities, regulatory rationale, forms of sanctions, and legal basis determine that the credit restoration of a “deadbeat debtor” cannot bypass judicial procedures. Instead, it must follow a specific sequence and pathway.

IV. The Path to Restoration: The Correct Sequence and Coordination Among Multiple Pathways

The credit restoration of a “deadbeat debtor” is a systematic undertaking rather than a single act. It requires the dishonest person or entity to first fulfill its obligations at the judicial level before proceeding in an orderly manner to address issues under the other three credit restoration systems.

(I) The Absolute Prerequisite: “Judicial Delisting” Through Completion of the Judicial Enforcement Procedure

For a “deadbeat debtor,” the sole and absolute starting point for every restoration pathway is to perform the relevant legal obligations and obtain “judicial delisting” from the enforcement court that made the original inclusion decision—that is, the deletion of the relevant information from the list of dishonest persons subject to enforcement. Any attempt at restoration that bypasses the court is institutionally ineffective.

Under Article 10 of the Several Provisions of the Supreme People’s Court on the Publication of Information Concerning the List of Dishonest Persons Subject to Enforcement, the principal statutory circumstances permitting “judicial delisting” include the following:

• Full performance: The person subject to enforcement has performed the obligations determined in the effective legal instrument, or the people’s court has completed enforcement.
• Performance of a settlement agreement: The parties have reached an enforcement settlement agreement, and the agreement has been fully performed.
• Application by the enforcement applicant: The enforcement applicant submits a written request for the deletion of the dishonesty information, and the people’s court approves the request after review.
• No assets available for enforcement: Following termination of the current enforcement procedure, the court has conducted at least two searches for the assets of the person subject to enforcement through the online enforcement inquiry and control system, no assets available for enforcement have been identified, and neither the enforcement applicant nor any other person has provided valid leads concerning assets.
• Change in the enforcement procedure: The people’s court has lawfully ruled to suspend enforcement against the dishonest person subject to enforcement because of trial supervision proceedings or bankruptcy proceedings, or has lawfully ruled not to enforce or to terminate enforcement.

In addition, where a prescribed period of inclusion applies to the relevant dishonest conduct, the people’s court must delete the dishonesty information within three working days after the inclusion period expires.

Once the relevant conditions have been satisfied and the court has deleted the dishonesty information, the corresponding coordinated sanctions, such as restrictions on high-value consumption, will be lifted. This constitutes the legal foundation and “passport” for subsequent engagement with the other credit restoration systems.

(II) Relationship with Financial Credit Restoration: No Substitution, but Institutional Linkage Exists

The financial credit restoration mechanism cannot, as a matter of institutional design, directly affect or replace a person’s dishonest status at the judicial level. A “deadbeat debtor” cannot have the status of dishonest person subject to enforcement removed by applying to the People’s Bank of China or to any financial institution.

Nevertheless, a critical linkage exists between the two systems. People’s courts transmit information from the list of dishonest persons subject to enforcement to the central bank’s credit reporting system, and credit reporting agencies record such information in credit reports in accordance with the law.

An important detail following restoration must not be overlooked. Even after the court has completed “judicial delisting” and lifted the sanctions operating in real time, the relevant adverse records will, under the Regulations on the Administration of the Credit Reporting Industry, remain in an individual’s credit report for five years from the date on which the adverse conduct or event terminates. A clear distinction must therefore be drawn between the “lifting of real-time sanctions” and the “statutory retention of historical credit records.” These are two entirely different concepts.

(III) Relationship with Public Credit Restoration: A Subsequent Follow-On Mechanism

For a “deadbeat debtor,” the public credit restoration system coordinated by the National Development and Reform Commission functions as a subsequent follow-on mechanism rather than an independent starting pathway.

The correct sequence of restoration is as follows:

First, the people’s court must lawfully lift the dishonesty sanctions and complete the “judicial delisting.” Only thereafter may the dishonest person or entity apply, in accordance with the Measures for the Administration of Credit Restoration, to platforms such as the Credit China website for the cessation of publication of serious dishonesty information relating to the judicially determined dishonest conduct.

(IV) Relationship with Market Regulation Credit Restoration: A Parallel Mechanism for Business Entities

This restoration pathway principally applies to enterprises, individually owned businesses, and other business entities that have been classified as “deadbeat debtors.” Its relationship with judicial restoration may be characterized as parallel.

This means that even after an enterprise has completed “delisting” at the judicial level, if it has also been placed by the market regulation authority on the list of abnormal business operations or the list of seriously unlawful and dishonest entities for other reasons—such as failing to submit an annual report on time or being unreachable at its registered address—it must still independently apply to the market regulation authority that made the original inclusion decision for removal from the relevant list in accordance with the Measures for the Administration of Credit Restoration by Market Regulation Authorities. The two processes do not substitute for one another and must be addressed separately.

V. Conclusion and Summary of the Core Points

The essence of “deadbeat debtor” status, or the status of a dishonest person subject to enforcement, is that it constitutes a sanctioning status arising from judicial enforcement proceedings rather than a simple credit-scoring issue. Accordingly, its restoration must follow a specific pathway under which the performance of judicial obligations is the absolute prerequisite. Clarifying the boundary between judicial sanctions and social credit governance is of vital importance to safeguarding judicial authority, ensuring the sound operation of the credit restoration system, and guiding dishonest persons and entities toward the appropriate forms of relief.

For ease of understanding and practical application, the three principal conclusions and reminders of this article are summarized as follows:

1. “Deadbeat debtor” status is a judicial matter, and restoration begins with the court: The creation and termination of the status of a dishonest person subject to enforcement are ultimately determined by the people’s court. This reflects the basic principle of credit governance that “the authority that makes the determination is responsible for the restoration.” Any attempt to bypass the enforcement court and “clean up” the status of a dishonest person subject to enforcement through financial credit restoration or public credit restoration channels lacks a regulatory basis and is bound to fail. The only correct starting point for restoration is to perform the relevant legal obligations and obtain “judicial delisting” from the court.

2. Restoration is an institutional exit mechanism, not the deletion of historical records: Completion of credit restoration means that real-time sanctions, such as restrictions on high-value consumption, are lifted and the publication of the relevant dishonesty information is discontinued, allowing the person or entity to return to normal social and economic activities. It does not mean that every historical trace will be deleted. In particular, relevant adverse records in financial credit reports will remain for five years from the date on which the relevant conduct terminates, as required by law. Dishonest persons and entities should therefore establish appropriate expectations.

3. Credit restoration is legally provided free of charge; beware of “credit report repair” scams: All credit restoration procedures administered by official authorities, including courts, the National Development and Reform Commission, and the State Administration for Market Regulation, are free of charge. Any intermediary service claiming that it can use paid “internal operations” or “technical methods” to remove adverse records prematurely or in violation of applicable rules belongs to the gray market. Such services may not only cause financial losses but may also involve unlawful conduct. Applications should always be submitted lawfully through official channels to avoid fraud.

References

[1]China Enforcement Information Online (zxgk.court.gov.cn): https://zxgk.court.gov.cn/.

Note: The author is Shanli Zhang. He is a doctoral candidate at the School of Law, Shandong University. The original title of the article was “An Analysis of the Formation Mechanism of ‘Deadbeat Debtors’ and Their Normative Relationship with the Credit Restoration System.” WeChat: 18811157736. Comments and corrections are welcome.