Concerned that more than half of college students have defaulted on loans for their education, Shanghai Credit Information Services Co. will create a special database to track students' credit histories.

The first consumer and corporate credit agency on the Chinese mainland, Shanghai Credit recently teamed up with the Shanghai Education Commission to compile records for college students who borrow from banks.

Managers of 15 domestic commercial banks estimate that there is a default ratio of more than 50 percent on education loans in China. The total amount of such loans is not available.

Intended to reduce bank risk in issuing a credit card or lending further money for education or major purchases, the new database is expected to be ready before July.

"Our current individual database includes few university students," said Yu Wenqian, a Shanghai Credit spokeswoman. "One reason is that very few of them have histories from such activities as credit-card shopping."

The new information will give local banks rich material on potential student clients, who normally do not put up significant collateral, according to Shanghai Credit.

Industry insiders, however, suggest that the company has been equally motivated by its own financial problems.

"After launching the new service, we get a new revenue source by selling the creditworthiness report to local commercial banks that provide education loans or are preparing to do so," noted a Shanghai Credit official, who requested anonymity.

While acknowledging that Shanghai Credit has lost money since its founding in 1999, Yu denied media reports that it lost 2 million yuan (US$241,000) last year. She did not give an exact figure for 2001 results.

In a drive to diversify its products, the company set up a corporate credit database last month.

It offers credit information on more than 480,000 local enterprises to government departments, commercial banks and potential trade partners.

"Compared with other corporate credit companies in the city, our fees are really low," Yu said.

Shanghai Credit charges 100 yuan for access to an enterprise's credit record, compared with an average of US$143 asked by Dun & Bradstreet Shanghai.

That Shanghai firm is a subsidiary of renowned U.S.-based Dun & Bradstreet, a leading world credit agency.

(eastday.com April 29, 2002)