Snooping in the Bathroom to Assess Credit Risk in China

A growing number of companies are trying to crack the credit code in China. The internet giants Alibaba, Tencent and Baidu are developing credit scoring systems based on users’ online transactions and search histories. Another niche lender, Jubao Internet Technology, plugs dozens of variables into its proprietary credit formula, including whether borrowers use their social media accounts to connect with celebrities.

“This is probably the largest untapped consumer finance market globally,” said the founder and chief executive of China Rapid Finance, Zane Wang, who spent years as the head of analytics at the credit arm of Sears, the American retailer.

Getting credit right is crucial to China’s economic plans. The government is trying to bolster consumer spending to help offset the sharp decline in the smokestack industries that…

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