It is people who did not pay their debts. Dr Jonathan Tam has a video on YT explaining it called:
Why the World Fell for China's Fake Dystopia
(Genuine question, I'm not American and don't have any desire to move to the US).
Neither. Above poster is wrong. You don't require anything to own a house or car in the US except your own cash/equiv. If you wish to borrow other people's money or property (in some cases at all when counterparty risk is high enough or buyers competitive enough, in most cases it's more a matter of interest rate), a sufficient credit score is the most standard and easy way to "make the case" that you will repay. But that's truly not at all required. I bought my current truck for $8100 cash on the table, I just showed up at the other guy's place and inspected it and chatted, looked good enough, paid him and we did the title change document, I screwed on a new plate and off I drove with it. Effectively zero dealers will not accept cash upfront. You can buy land and just build your own place.
Obviously, a lot of us find having credit very useful. And it's also both convenient and good for fairness/economic velocity/efficiency not to generally have to explicitly put up any extra collateral to get it or go through some complex old fashioned social dance. Hence "credit scores" that systemize a lot. But claiming they decide "whether you're allowed to have a house or a car" warps things badly.
I'm living here (China, Beijing and Jiangsu) now, and there are exactly two cases in the past eight months where the "social credit" system has had any impact at all:
- To open "take first pay after" vending machines. These are vending machines which are basically big locked fridges; if your credit score is high enough, you can open the machines, take whatever drinks/snacks you want, and they'll use (I presume) computer vision to charge you afterwards. If you don't have a high enough credit score, tough, you can't use them. (But there's almost always normal pay-first vending machines nearby).
- To borrow mobile charging packs (powerbanks). Some operators will let you "swipe your credit" (check your credit score) to take one without paying a deposit. If your credit score isn't high enough, you first pay e.g. a ¥99 deposit (~$15USD) which gets returned when you return the powerbank, not a big deal.
That's...it. My credit score is high enough on only one platform (Alipay), so I get to try what happens with both "high" and "low" credit, and I can confidently say these are the *only* two cases where I have even been asked to show the credit score. I have taken multiple train trips, bought lots of stuff in stores and restaurants, etc. without ever touching the "social credit score".
P.S. I literally don't even know how to raise my credit score, and neither do many of the folks who live here - again, not that it matters, because the score is simply not that important.