Credit data generated by Ant Group Co.’s popular consumer lending service will be fully integrated into a government credit-reporting system, a significant step in a continuing effort to bring the financial-technology giant into line with Chinese regulators’ priorities.

Ant’s service Huabei, which means “just spend” in Mandarin and functions like a virtual credit card, said in a social media post Wednesday that “is advancing with its orderly inclusion into the financial credit information database held by the Credit Reference...

Credit data generated by Ant Group Co.’s popular consumer lending service will be fully integrated into a government credit-reporting system, a significant step in a continuing effort to bring the financial-technology giant into line with Chinese regulators’ priorities.

Ant’s service Huabei, which means “just spend” in Mandarin and functions like a virtual credit card, said in a social media post Wednesday that “is advancing with its orderly inclusion into the financial credit information database held by the Credit Reference Center of the PBOC,” referring to the People’s Bank of China, the country’s central bank.

The post said Huabei users will be asked to authorize sharing of credit information with the PBOC system. Those who opt out won’t be able to use Huabei’s service. Information such as account setup dates, credit line amounts and repayment status will be reported to the central bank’s database on a monthly basis.

Huabei said it won’t share specific transaction information, including about what people purchased and when.

The Wall Street Journal has reported that Ant is separately in talks with state-owned companies to set up a licensed credit-scoring company, which would put the fintech company’s proprietary consumer data under regulators’ purview.

Credit data held by services like Huabei is crucial to the central bank’s quest to develop a robust reporting and scoring system akin to FICO in the U.S. Until recently, Ant and other fintech companies had resisted calls to feed their information into the nationwide database.

The data generated by Ant’s vast user base along with its proprietary algorithms has been a key competitive advantage for the company, whose initial public offering was halted in November at the last minute as Beijing grew concerned about its growth and lack of regulatory oversight. Ant used that data to build a giant and fast-growing lending business outside the purview of the central bank and banking regulator. Ant operates Alipay, a payment and lifestyle app used by 1 billion people in China.

Ant previously partnered with commercial banks to extend loans to around 500 million people, collecting handsome fees and leaving the banks bearing most of the credit risk. Those loans had an outstanding balance equivalent to about $263 billion as of June 30 last year, the most recent data available.

Huabei, embedded with the Alipay app, filled a gap by serving young, internet-savvy consumers who often found it hard to obtain credit cards from banks. That consumer loan data wasn’t fully integrated into the PBOC’s credit-reporting system, making it difficult for regulators to assess banks’ exposure to potential defaults and individual borrower’s creditworthiness, a sore point for regulators.

Ant, controlled by billionaire Jack Ma, has been forced to overhaul its business in the wake of the canceled IPO. It is in the process of turning itself into a financial holding company overseen by the central bank and obtaining various financial licenses to ensure its businesses are compliant with regulations.

Wednesday’s notice follows Ant’s establishment of a new consumer-finance subsidiary to incorporate its lending operations. In June, Chinese regulators approved the setup of Chongqing Ant Consumer Finance Co., which will fundamentally change how Ant extends loans and credit to Chinese consumers.

Earlier, as Ant started rolling out the integration, some users posted on social media that Huabei had asked to share their credit information with the PBOC’s system. That created some confusion and worry among users about the implications of such inclusion, prompting Huabei to announce the change.

“Inclusion of Huabei credit information into the PBOC’s credit reporting system will help enhance the comprehensiveness of users’ credit reporting information,” Huabei said in the post. “We recommend that users continue to maintain rational use of Huabei, spend within their means, and make appropriate use of credit tools.”

—Qianwei Zhang contributed to this article.

Write to Jing Yang at Jing.Yang@wsj.com