Bad credit can be fixed

State Commissioner for Data Protection and Freedom of Information

Background: SCHUFA is only allowed to transmit data to banks if the banks have given it a reason for querying it beforehand in individual cases. Until autumn 2006, the banks were only able to transmit the "loan request" feature as a query reason. With this feature, the bank ensures that the person concerned has submitted a credit request to them, for the processing of which they need credit information from a credit agency. But SCHUFA does not only store this feature as proof of the legitimate interest of the requesting bank. Rather, it also uses and transmits it for other purposes.

On the one hand, SCHUFA also transmits the feature to other banks for a period of ten days so that they can also take into account parallel lending when checking the credit line. On the other hand, the SCHUFA has been using the information "loan application" since the introduction of its score procedure to calculate the score values ​​of those affected. With the grave consequence that since then every request communicated to SCHUFA about credit conditions has significantly worsened the person's SCHUFA score.

The recommended and sensible behavior from the point of view of consumer protection, not to take the first loan, but to inquire about the terms and conditions at several banks in advance, was the undoing of the loan seekers: the more inquiries, the worse the score, the worse the loan terms offered. The paradoxical result: Anyone who asked many banks about low interest rates worsened the prospects for a loan with low interest rates with every request.

The ongoing criticism of this scoring practice under data and consumer protection law led to a change in the SCHUFA procedure in September 2006.

However, SCHUFA did not waive the use of the "credit request" feature for calculating the score value. Rather, it introduced a new, additional feature “request for conditions”. In contrast to the “loan request” feature, this should not be included in the score calculation and should not be transmitted to other banks for ten days.

However, the SCHUFA failed to give the banks a clear definition to differentiate the two characteristics. Logically, a report published by Stiftung Warentest at the beginning of 2007 showed that when test subjects asked about credit conditions in the months from October to December 2006, none of the banks tested reported the new feature to SCHUFA in the corresponding credit queries. Instead, as in the past, the “loan request” feature was transmitted - with the result that the score of all test persons deteriorated significantly after one request.

In order to remedy the implementation deficits, the SCHUFA, the banking associations, which are part of the Central Credit Committee (ZKA), and the data protection authorities agreed the following delimitation criteria and requirements for the future registration practice of the banks in a meeting in mid-2007 in Düsseldorf:

Only when loan seekers submit a loan application in the legal sense, i.e. submit a binding declaration of intent to conclude a loan agreement, the previous feature "loan request" is used. Since the registered feature - as a so-called positive date - is transmitted to other banks for ten days and used for the score calculation for a period of one year, in the opinion of the supervisory authorities, written consent from those affected is required prior to transmission to SCHUFA i . See § 4a BDSG, for example in the form of a signed SCHUFA clause.

In all other cases in which the loan seeker does not submit a binding loan application, the "Condition request" feature should be used. This feature is not transmitted to other banks and is not included in the score calculation. Therefore, the transfer only requires exemption from banking secrecy, which can also be declared orally.

ZKA and SCHUFA agreed to implement the found solution in a timely manner. However, following the meeting, some banks apparently told their associations that they did not accept the result they had supported. The ZKA then revoked its consent to the agreement that had been reached, without providing a comprehensible reason for the data protection authorities.

The result of the new version of the banking test by Stiftung Warentest, which was published at the beginning of 2008, was correspondingly sobering: several SCHUFA banks still reported the "credit request" feature in "condition inquiries" - with the corresponding negative consequences for the respective score value .

Banks that inadmissibly report the "credit request" feature to SCHUFA in the future must expect the initiation of administrative fine proceedings. Unfortunately, the data protection authorities do not have the right to prohibit such illegal transmissions in advance.

In addition, a draft law of the federal government amending the Federal Data Protection Act (BDSG) provides for a ban on sending inquiries from citizens about credit conditions to credit agencies, insofar as the credit agencies pass this information on to others or use it to calculate score values.