Barring someone from getting an education because of their father's debts seems tremendously short-sighted. Setting aside the issue of being punished for someone else's offenses, if you start taking away people's life prospects, it's not hard to see the criminal undervlasses growing in numbers. If the case described in the article is representative of how this credit system works, it seems likely to undermine the stability of Chinese society, not bolster it.
If you click through the links after links and read the original article, the family obviously had a $200,000 loan from a bank and failed to pay at due time, meanwhile his kids still attend private schools. The case was brought to a court, and the father was added to the "blacklist".
This story aside, the system is in spotlight because China now have a huge debt problem.