Credits and Co.: How fair is Schufa and its competitors?
Loan requested, loan refused! Not infrequently, the reason for the refusal is that the SCHUFA information obtained does not allow lending. But what happens if the data available to SCHUFA is simply flawed, inadequate or even wrong? Or if from a few present simply wrong conclusions are drawn? Is that fair? Or even fair?
There are companies that, due to their business model alone, find it difficult to develop a respected position in society. Neither big marketing budgets nor alleged transparency campaigns help. One of those companies, which undoubtedly fall under the category “unpopular companies”, is probably the SCHUFA. The SCHUFA has concentrated its business model on something that can influence the daily lives of over 60 million citizens . Schufa collects vast amounts of personal data, evaluates them and forwards corresponding “results” to its affiliated partner companies. The goal behind it? Providers of goods and services to protect against a possible default on credit and billing transactions .
A service that is mandatory from the point of view of the affiliated companies, because not a few companies see the offer of Schufa as well as their numerous competitors such as Creditreform, Bürgel, EOS etc. as a kind of insurance . An assessment that is basically correct, if the data transmitted by SCHUFA & Co at the request of the companies would also be correct and therefore reliable.
For that is exactly what one, although to date probably rather small proportion of the population in relation to the so-called SCHUFA information learns again and again. A credit rating or credit score, for example, leads to rejection of a loan. A refusal, which often leads to a “head shake” with affected persons and with the question “I do not understand!” Is answered.
What is understandable especially when the known conditions for a loan are actually given >>
- Regular, above-average income
- Firm, unfinished employment
- Permanent residence
- Document of a clean budgeting
- If necessary. Even the existence of a second borrower
So what should be the problem because of such conditions when taking out a loan? Especially since not even other debt ratios exist?
What should SCHUFA and Co. then please to the credit-seeking person exposing? What data does the SCHUFA have about persons who, in spite of such specified conditions, receive a refusal when taking out a loan?
SCHUFA data is faulty
The answer to this? In the worst case, the SCHUFA has no data and thus “spits out” the algorithm as the basis of the credit score a negative value, which is just synonymous with a high risk of default “. And with such an assessment, no bank will grant a loan let alone agree to the opening of a “normal” checking account. Is that fair? No – of course it is not. Because it shows one thing very clearly: the SCHUFA has power. A power that influences the daily life and its participation in the economic life of each individual, which has the SCHUFA data . To whatever extent.
And that is precisely the crux of the SCHUFA “offer”: data are incomplete, error-prone and simply “misinterpreted”. Another shortcoming: They are often old and thus, in a fair way of looking at actually no longer relevant to assess the current credit rating of a person.
SCHUFA assessment: Once defaulting payer, always defaulting payer
The argument that one can derive patterns of behavior for the future from historical data may perhaps be comprehensible, but here too the question: is that fair? Common sense may well answer with a clear “no.” For even a defaulting payer, does not mean that this is inevitably, from birth, existent blemish.
And yet, despite such practices and assessments, SCHUFA is tipping the scales when it comes to companies accepting or declining to do business on a credit basis.
The impact of SCHUFA’s daily life on the extent to which SCHUFA’s collected data is actually incorrect is shown in the following video:
The video can certainly also be seen as proof that the demand for greater transparency at SCHUFA & Co, which has recently become more prevalent , seems to be justified.