China to scrub small overdue debts from credit records to help spur lending

China’s central bank on Monday unveiled a one-off credit repair scheme to allow overdue personal debts of up to 10,000 yuan ($1,420.47) incurred since 2020 to be removed from credit records once fully repaid, as Beijing moves to revive faltering household loan demand.

The announcement follows data showing new bank lending fell short of expectations in November, weighed down by shrinking household loans, and as economic momentum weakened, with retail sales hitting their lowest level since the end of the country's strict zero-COVID policies.

The central bank said overdue personal credit entries involving single amounts of no more than 10,000 yuan, incurred between the start of 2020 and the end of 2025, would be removed from the national credit database if borrowers repaid in full by March 31, 2026.

The measure aims “to actively address the lingering effects of the COVID‑19 pandemic, support individuals whose credit has been impaired but who are actively repaying their debts in efficiently and conveniently rebuilding their credit," the bank said.

The policy would help people improve their credit standing, and also support high-quality economic growth, Vice Central Bank Governor Zou Lan told a press conference. It would also help lenders more accurately assess personal credit conditions and improve the quality and efficiency of inclusive finance, he said. Inclusive finance refers to financial services that give low‑income groups and small businesses access to banking, credit, insurance and investment products.

Chinese leaders have pledged fresh policy measures - including fiscal stimulus and potential cuts to interest rates and banks’ reserve requirement ratios - to underpin growth next year.

The central bank left benchmark loan prime rates (LPRs) unchanged for the seventh consecutive month in December on Monday, in line with market expectations.