* Central bank changes tack on personal credit rating - sources
* PBOC says none of 8 tech firms meets license criteria - sources
* Many younger Chinese now spending on credit
* Consumer borrowing about $4 trln in May
* Talks may end with deal for limited data sharing - sources
BEIJING, July 4 (Reuters) - A drive by China's big technology companies to develop credit scoring platforms, originally backed by Beijing, faces growing opposition from regulators, who fear the initiatives may threaten data security and create conflicts of interest.
Two people familiar with the process told Reuters that the central bank - which in 2015 allowed eight firms including Alibaba's Ant Financial and Tencent Holdings to develop scoring systems - has quietly pulled back its support.
The People's Bank of China has shelved plans to turn that initial approval into official licenses, the people said, raising questions over what services the firms can offer and their ability to build fully-fledged credit bureaus.
The impasse also underlines how China's tech companies with banking ambitions struggle with unpredictable regulation as Beijing weighs the pros and cons of private sector involvement, when it needs to both encourage consumption and control economic risk.
"Clearly there's a conflict of interest and that's something the PBOC has realised," said one of the people, adding the bank felt none of the eight firms was entirely suitable. "They're not going to stand up and publicly admit they made a mistake; the only power they have is to basically not grant the licenses, which is what they've done."
Unlike leading international peers that only operate credit scoring systems, these Chinese firms have existing businesses in commerce and finance, raising questions about their impartiality, the people said.
The two people - one with direct knowledge of the scheme and a central bank official - asked not to be named as they were not authorised to talk publicly about the plans.
The PBOC did not respond to requests for comment.
Yet, in a closed-door seminar in April, Wan Cunzhi, head of the PBOC's Credit Information System Bureau, said there was currently a "major conflict of interest" - potentially the first acknowledgement of concern outside internal circles.
"Their corporate governance structures don't have third party credit independence," he said, referring to the eight companies, according to a transcript of the speech seen by Reuters and confirmed by a person who attended the seminar.
"It's not possible under these circumstances to give out licenses unless they can meet the standards."
The eight firms are Ant Financial's Zhima Credit, Tencent, Sinoway Credit, Lakala Payment Co, Intellicredit Inc, China Chengxin Credit, Pengyuan Credit Service Co Ltd, and Qianhai Zhengxin, a unit of Ping An Insurance.
"On one hand, the government is trying to encourage this inclusive financing, but on the other hand, they are tightening regulations to make clear rules for the game," said John Chen, China Managing Director of U.S. credit scoring firm FICO .
Tencent, Ping An and other smaller rivals among the eight did not respond to requests for comment. An Ant Financial spokeswoman said discussions with the PBOC were ongoing.
An official at Chengxin Credit declined to comment on the firm's plans. "At the moment, we haven't received the license, and we're still waiting for information from the PBOC," she said.
SPEND, SPEND, SPEND
Ant Financial, tapping hundreds of millions of monthly users of its own services and those of Alibaba, has an online bank, MYBank, controls the world's largest money market fund Yu'e Bao, popular payment platform Alipay and lending service Huabei.
It also has Zhima Credit, or Sesame Credit, one of China's most popular platforms, which scores people depending on their use of other Ant-linked systems - in effect, their shopping habits. Zhima Credit currently has roughly 260 million users.
Tencent Credit Service has a website offering credit scores, though currently it is not accepting new users.
None now offers the full suite of consumer credit reporting agencies like Equifax Inc, Experian Plc and TransUnion, but had hoped to expand as China borrows more on credit.
While China's older generations are mostly still big hoarders, more young Chinese consumers are spending on credit.
Consumer borrowing topped 27 trillion yuan ($3.96 trillion) in May, more than four times the level in 2010. Household debt relative to the economy, still lower than in many Western economies, has also ballooned.
Yet China's existing, centralized credit scoring system, the Credit Reference Center, only covers around 300 million people out of around 800 million potential borrowers. That creates a blind spot of some half a billion borrowers beyond Beijing's credit network. By contrast, almost all adults in the United States have a credit score.
Companies like Equifax, Experian and TransUnion use a plethora of data from banks, legal bodies and tax agencies to help lenders decide whether to extend a loan and at what rate.
The current scope in China is rather more limited: Zhima Credit scores are linked to shopping patterns on Taobao, Alibaba's online marketplace, or online payments made through Alipay, while the benefits include waiving a deposit on a rental car, jumping the queue at a medical clinic or quicker visa applications.
Industry insiders said discussions between the firms and regulators could find a way forward, possibly through a limited data sharing agreement.
"Right now, it's unclear what will be the next step," said FICO's Chen. "What is clear is that the eight firms, as they are today, will not get those licenses."
($1 = 6.8268 Chinese yuan renminbi) (Reporting by Cate Cadell and Shu Zhang; Additional reporting by BEIJING and SHANGHAI newsrooms; Editing by Adam Jourdan and Ian Geoghegan)