The SCHUFA and its competitors in the market of credit information: For companies a supposed protection against possible credit default, often a nuisance for consumers. Again and again, there are cases of erroneous information. Transparency? Not existent. A circumstance that the consumer protection minister now wants to change.
A situation that occurs a thousand times a day: You apply for a loan, request a new car insurance via a comparison portal, want to conclude a new mobile phone contract in a mobile phone shop and what happens: you are rejected! It is not the credit, the cheaper car insurance, the new mobile phone contract or anything else. Why? Because simply because of a credit check as a non-creditworthy or solvent customer was “recognized” . A result that companies provided by one of the numerous credit bureaus a la Schufa, Creditreform, Boniversum, Bürgel, etc. under a membership. Thanks to the accumulation of a variety of data, these credit bureaus calculate the so-called credit score, which in turn should be a measure of whether a potential customer could face a payment default! Mind you “could” – because the data come from the past and basically never reflect the current financial situation of a person again.
In addition, there are always cases in which the credit bureaus – above all the SCHUFA – deliver faulty data to the contractual partners. What then logically leads to actually unjustified rejections – for example, in a loan application – leads. But the really fatal thing about the system “credit check” is that the system for determining the credit score to this day is a well-kept secret of Schufa and Co.
In plain English: It is impossible for any outsider to gain insight into how the SCHUFA obtains, processes and evaluates the personal data . For many consumer advocates and their associations for years a nuisance and in the form of lawsuits repeatedly landed in front of German courts. Success? None! Time to intervene for the policy here with corresponding legal regulations. But so far wishful thinking, because the legislature is difficult with a corresponding transparency rule for credit bureaus.
Consumer Protection Minister demands more transparency and announces examinations
Nevertheless, occasional politicians venture again and again a push to demand more transparency from Schufa and its competitors. So again the current consumer protection minister Katarina Barley of the SPD. She has a clear position on transparency in credit reporting:
“Every citizen must have the right to know which key features have been included in the calculation of their own creditworthiness and how they are weighted”. In plain language: The credit bureaus such as SCHUFA, Creditreform and Co. are obliged to provide more transparency from the perspective of the citizens.
The minister is willing to emphasize her demand on the SCHUFA, confirming her by announcing a kind of test procedure. She wants to know which criteria are used to evaluate the credit score.
“In the context of a possible regulation of scoring companies, we will examine the extent to which they can be obliged to observe non-discrimination rules when calculating their scores,” said the Minister for Consumer Protection.
Why the recent push by the consumer ministry?
In the end, the only question is, why again such a push? After already courts had dismissed corresponding complaints? Responsible for this is a recently published report by the Bayerischer Rundfunk as well as the magazine “Spiegel”, after which an evaluation of 2,800 SCHUFA reports was published. With a result that, while not really surprising, is now giving rise to the activity of the Ministry of Consumer Protection. Thus, the evaluation showed that the SCHUFA also badly rated persons for whom only a few and / or neutral information was available. In addition, apparently age and gender played a role in the evaluation. The dataset came from volunteers of a transparency project.
And the Schufa?
And the SCHUFA? Faced with this evaluation, the statement was almost as expected, “Inaccurate and wrong.” To then directly refill, because in the opinion of the credit agency, disclosure of the scoring criteria could jeopardize the reliability of the test. Then just ask yourself: who will check, if this is really the case? Maybe now the Consumer Protection Ministry.