Consumer advocates are calling for “Schufa TÜV” for credit agencies

As of: May 15, 2024 12:48 p.m

Credit agencies such as Schufa calculate consumers’ creditworthiness. However, there is no check of credit scores. From the perspective of consumer advocates, this should change.

Everything possible in Germany is transparently checked and certified. But consumer advocates complain that there is no independent quality control when it comes to the sensitive consumer reviews from Schufa & Co.. And that’s why they are taking today’s first reading of the new Federal Data Protection Act (BDSG) as an opportunity to demand a kind of “Schufa TÜV”.

The so-called credit scores, which are calculated by credit reporting agencies and which companies use to assess the creditworthiness of consumers, are to be certified in the future, in a similar way to cars during an MOT inspection.

Score should Payment behavior predict reliably

“Concrete quality requirements for the forecast accuracy and meaningfulness of the scores should be set here and checked as part of mandatory certification procedures,” says a statement from the Federal Association of Consumer Organizations (vzbv). NDR and Süddeutscher Zeitung.

On the one hand, this means that the credit agencies should only use information to evaluate people that can be proven to say something about people’s payment behavior. In addition, the credit agencies should also have to prove that their score can actually reliably predict people’s payment behavior.

Creditworthiness calculation should become more transparent

A second important demand from consumer advocates is aimed at companies that query the scores from credit agencies and make a decision with them about a loan or contract. They should have to inform consumers if the conclusion of a contract for a cell phone or a loan fails due to a bad Schufa score. Until now, those affected had little insight into such a case and could only guess what role their score played in the event of a rejection by mobile phone operators or banks.

The “use and calculation of credit scores is in many cases hidden from consumers,” according to the vzbv. The association therefore proposes to include in the law that people will be informed precisely and transparently about their score and its importance for contract decisions in the future.

Consumers no longer rate based on neighborhoods

In their current government draft, the Federal Ministry of the Interior under the leadership of Nancy Faeser (SPD) and the Consumer Protection Ministry under Steffi Lemke (Greens) want to set stricter rules for credit reporting agencies such as Schufa in the future. In doing so, they are reacting to a ruling by the European Court of Justice (ECJ) in December 2023, which made changes necessary.

The most important innovation concerns the use of personal data. The draft law already states that in the future credit agencies will no longer be allowed to rate consumers based on the area in which they live. This step has been demanded and welcomed by consumer and data protection advocates for a long time.

However, they had NDR and SZ reports that the new regulation could also mean that the Schufa credit agency gets even more power than before. The new Federal Data Protection Act is expected to be passed by the summer break. Parliamentary circles say that the time pressure is high, also because there are still several requests for changes to the new law.

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