The Importance of Credit Score in Grant of Loans

No question: no one likes to lose money, give out goods without pay or likes to work for free. It is not without reason that in German usage the saying “trust is good, control is better.” What results in real life is, above all, banks, online retailers, mobile service providers, utilities and the real estate sector against possible payment defaults by customers with low credit ratings or more or less existing payment morality. Accordingly, if a bank is to grant a loan , the bank must be sure that it will get back the amount borrowed as agreed.

So information must be forth and these are delivered in Germany in the vast majority of cases by the SCHUFA or comparable companies such as Creditreform, Bürgel, etc. Based on the information provided by SCHUFA and Co. on the creditworthiness of a potential customer – especially the so-called credit score – companies decide whether and under what conditions a transaction takes place on credit or not. Catch on the matter? Again and again tests show that the data of the SCHUFA to individual citizens are incomplete, if not completely wrong and the resulting false values ​​of the credit score lead to wrong decisions at the affiliated companies. The final victim is always the consumer. And it is not uncommon for consumers to quite rightly wonder where the data from their SCHUFA has and whether you can collect this data?


Can the SCHUFA even collect data on individuals?


 Can the SCHUFA even collect data on individuals?

To answer the first part of the question: The SCHUFA collects data on the one hand by transmitting corresponding information from about 9500 affiliated companies and public debt directories, etc. And the second valley of the question of whether SCHUFA as a private company collect this data at all store and evaluate, must also be answered with a yes. The basis for this is the so-called EU General Data Protection Regulation. This regulation allows private companies such as SCHUFA to transmit and store data. The prerequisite for this is a legitimate interest, which in the case of Schufa is the protection against payment default for companies.


Continuous stumbling block: the SCHUFA credit score


 Continuous stumbling block: the SCHUFA credit score

In order to assess whether a payment default is imminent, SCHUFA has created a type of index or value known as the credit score. This credit score is the result of an evaluation of all collected credit data of a person. The value of the credit score can be between 1 and 100. It is true that the higher the value, the more solvent the customer and less the threat of payment default. However, it should be noted that a value of 100 is almost unattainable, because this would be the assumption of a payment guarantee for a third party at the same time. A guarantee that the SCHUFA simply can not and certainly would not give.

So far, so good, but just that credit score is a perennial stumbling block and that now no longer just for consumers and consumer advocates, but increasingly also for politicians. For as the credit score is ultimately calculated, a secret is that the SCHUFA protects like Coca-Cola its effervescent formula.

So there is the criticism of complete lack of transparency in the room and this criticism can not be dismissed out of hand. This is how people get a score value that often has nothing to do with the real economic situation of the consumer. In plain language: He is classified as a person of low credit rating, although the reality shows the complete opposite >>


  • Good, permanent salary from permanent, non-terminated employment
  • No debts
  • No variety of checking accounts
  • Continuous credit card with regular return


Etc., etc. So how can this result in a bad credit score? “Man” does not know, because according to a decision of the Federal Court of Justice in 2014, the Schufa may keep the calculation of the credit score secret (ref .: VI ZR 156/13). But this also means that this right of secrecy makes control of the procedure almost impossible. Although there is more and more opposition to this and politics is more and more involved in the demand for more transparency, but until something really relevant moves here, it will probably take some more time to get into the country. So first of all be aware of what you can do as a victim against a faulty or even false Schufa information.


SCHUFA information incorrect? That’s what you have to do!

 SCHUFA information incorrect? That's what you have to do!

For this purpose, it is basically necessary to know what the SCHUFA has in store for personal data. In order to find out, you as a consumer have the right to demand a so-called self-information once a year free of charge. On the basis of this self-report, it can already be recognized to what extent erroneous or even incorrect entries are stored at the SCHUFA. It must be made clear that the correction, deletion and blocking of incorrect data is mandatory for SCHUFA. This is NOT a performance on the part of SCHUFA for reasons of goodwill.

If data is to be corrected or deleted, the following procedure has proven to be valuable:

  • informal letter to the Schufa
  • Alternatively, contact the company directly, which is responsible for the incorrect entry
  • describe exactly what is wrong and if possible attach evidence / evidence
  • in case of problems with the SCHUFA turn on the ombudsman

In general, it should be noted that in dealing with the SCHUFA a certain persistence and resoluteness can be helpful.