In Germany, all companies that want to enter into a contract with a customer, carry out a credit check. The credit check gives the company a security regarding the payment behavior of the customer. The credit rating is summarized in a score that includes many different characteristics of the customer.

Basically, it can be said that all companies that sell or loan something to a customer first ask for creditworthiness or even creditworthiness. If a customer wants to bypass this credit check, this only works in neighboring countries, for example in Liechtenstein or Switzerland.

P2P loans from individuals or non-Credit bureau loans are becoming more and more popular, and not just for customers who have a bad credit rating. Even customers who have a very good credit rating thus keep their good values ​​with these two loan offers. Both forms of credit are not registered in the Credit bureau.

When P2P credit credit bureaus are requested, the credit without Credit bureau is completely waived. However, here there are increased acceptance criteria such as income in some amount or length of employment with the employer.

Even customers who are self-employed and can not show a steady income, customers with a temporary or probationary period, have the chance to conclude contracts. There is also a corresponding market for this target group, where collateral is put down in a higher interest rate. In addition, collateral such as home ownership or guarantor can be specified. Meanwhile, there are also contractors for apprentices, students or unemployed.

Who performs a credit check

Who performs a credit check

Basically, all companies carry out a credit check where the customer has a payment obligation to the company. All banks check the creditworthiness before they grant a loan or even with new customers. This allows the bank to gain an overview of the customer’s method of payment and thus decide on the basis of the score whether they want to establish a business relationship with the customer and under which conditions.

All sellers, where the customer buys on account or installments, check the creditworthiness before conclusion of the contract. Especially in recent years, the number of landlords who carry out a credit check before the conclusion of the lease increases. This has probably just increased because there are more and more and these are very difficult to sue from the apartment when not paying the rent.

On the other hand, a credit check should also protect the customer from over-indebtedness. If the contracting party issues a condition request to the Credit bureau, this is obvious to the customer, but not to the contractual partners. Also, the condition request does not degrade the score. However, if the contracting party notifies the Credit bureau of a credit request, this request is visible to other contracting parties making a request and also has a negative effect on the score.

Customers who have no entries in the Credit bureau can have a bad Credit bureauscore despite their excellent credit rating. Because here the score is largely calculated by the comparison group of the customer, this is z. Based on age, place of residence and so on. If there are high defaults in this group of persons, then this customer also has a worse scoring.

In general it can be said that Credit bureau entries are not necessarily bad. You can also have a positive influence on the credit rating, if there is a perfect payment pattern, loans are repaid prematurely or loans are combined.

Where is the credit rating requested?

Where is the credit rating requested?

In Germany, there are various so-called credit bureaus, it is about self-employed companies collect the data on all German citizens and calculate a score from these, which states how high the probability that the customer meets his payment obligations. The largest credit bureau is the Credit bureau. In addition to the Credit bureau Holding there are other credit bureaus such. 

Not all credit bureaus work with score values. Many companies collect the information about their potential customers from various credit bureaus. All credit bureaus work with an algorithm that does not reflect the real financial situation of each client. Does the customer live z. For example, in an area where many people are not so wealthy, this has a negative impact on the score of the customer, even if he is financially solvent.

Which data is requested

Which data is requested

In addition to the general information about the customer such as name, address and date of birth, data on the existing payment obligations are queried. The credit bureaus also record so-called negative factors such as late payments, chargebacks or personal bankruptcies / arrest warrants. These negative factors usually seal a rejection of the contractor.

Ongoing contracts

All purchases on installments, loan approvals, opening of checking accounts, credit card applications, mobile phone contracts and leasing installments are recorded at the credit bureaus. For this purpose, general data from the target group to which the customer counts are recorded. From this, the so-called score is calculated.

Based on the score, the contracting party can then derive the probability of payment of the customer. Unfortunately, many entries about loan requests or current loans are stored for several years in the customer’s data.

Influence on the score

Would like a customer  take advantage of a cheap loan offer, he will have to make several requests to different lenders to find the cheapest offer. Unfortunately, the loan seeker thus negatively influences his Credit bureauscore. Because not all lenders make a neutral request to the credit agency, all inquiries are stored for at least a year at the credit bureau, even if no credit comes off.

Many requests worsen the score and convey to any other lender that the borrower did not want to lend to any other lender. Even current loans that have been rescheduled are not deleted for three years at the credit bureau and not always reported by the old lender as done to the credit bureau.

This also drops the score drastically because suddenly there are two loans with certain sums in it and not just the new ones. The credit bureaus give the public no insight about the calculation of the company’s internal score, so the consumer is in the dark and does not know what data have led to a negative credit rating.

Many citizens have no idea what is stored in the credit bureaus about them and whether the entries are really all right. Only when they want to make a purchase on installments or sign up for a new mobile phone contract and are rejected, they worry about their score and their disclosed credit rating of the credit bureaus. J

All citizens can only be recommended to keep an eye on their creditworthiness. For example, you can apply for self-assessment once a year at Credit bureau free of charge. The entries can thus be checked and, if necessary, incorrect entries or obsolete entries deleted. Also with reminders the customer should make sure that the late payment is compensated promptly.

Not all contracting parties give in direct reminder to the Credit bureau, there is however already the third warning is an entry very likely.

The credit bureaus only record information about the customer’s expenses, and the credit bureaus do not have any information about their income. So it is a rather one-sided source of information that deals mainly with negative characteristics of the customer.

Expiry of the credit check

Expiry of the credit check

If the customer requests self-disclosure from the Credit bureau, he receives an overview of all entries in the Credit bureau, such as loans that have been taken up, have already been paid off or are still in repayment. In addition, credit cards and bank accounts are displayed, disposition loans, their amount and utilization are not specified in the Credit bureau.

Every credit inquiry with lenders is noted in the Credit bureau, many requests make a bad impression. This happens especially in comparison portals, because there directly ask several potential lenders from the Credit bureau. The Credit bureau information is divided into a Credit bureau orientation value and the Credit bureau industry score. The orientation value is created on the query date. The scale ranges from 100 to 600, where 100 denotes the lowest risk of default and 600 represents the highest risk and also indicates negative entries.

The Credit bureau industry score provides information on the risk of contracting in the different areas. This is subdivided into the banking, cooperative banks, savings banks, mail-order, stationary and communication sectors. The score goes from 9999, which corresponds to the rating level A and describes the lowest defaults.

A score of 0 is rating grade P and describes the highest risk of default. For rating levels N, O and P, there are already negative entries such as payment difficulties or insolvency proceedings. Each company ultimately decides with which customer a contract is reached, the Credit bureauauskunft should only be an aid.

Under my Credit bureau customers have the opportunity to keep track of their credit rating every day. In addition, the customer is informed about requests or changes in score values ​​by e-mail.

Which information can you query?

Contractors also receive information about the existing loans. When they were taken and in what amount. How many months should be paid and when was the beginning of the contract. Unfortunately, requesting contractors only see the net amount of the loans and not the payments already made.

Maybe intermediate payments have already been made by the customer and the credit is almost paid off, but this information is not received by the contractor. Thus, a refusal can also be made by a contractual partner, as he only sees the original sums. This is a major shortcoming of the Credit bureau query, because it falsifies the actual image of the customer.

Sometimes it also happens that loans have already been paid, but this note was not reported to the credit agency by the contractor. That’s why it’s so important that the customer himself keeps an eye on his entries.

What are the advantages and disadvantages of a credit check?

What are the advantages and disadvantages of a credit check?

Above all, a credit check has advantages for the company requesting the credit check. The credit report provides the company with a degree of certainty regarding the future payment obligations of a customer. Even if the information is not always meaningful, since the income of the customer is not recorded.

Most contractors make inquiries to various credit bureaus and then evaluate these data themselves. Thus, the contractors include many different information about the customer to their own company score. An important component, especially in the case of loans, are the additional documents submitted by the customer, such as salary statements and account statements.

Some banks have very strict acceptance criteria, they form an internal score from the various pieces of information and also have specific percentages that calculate the monthly budget for loan installments. Many direct banks offer somewhat relaxed acceptance criteria, also promoting that they grant loans despite poor credit rating. But in the end, they let the uncertainties pay with a higher interest rate.

If you have a bad credit rating or negative entries in the credit bureaus, you still get the opportunity to apply for a loan through a P2P platform or a loan without Credit bureau.

For the customer himself, providing information via a credit agency offers many advantages, especially if the credit rating is very good. The customer receives z. Eg loans at good interest rates. If the credit rating is bad, the customer is protected against over-indebtedness.

How can creditworthiness be positively influenced?

How can creditworthiness be positively influenced?

Anyone can positively influence their own credit rating by first keeping an eye on their entries and also checking whether they are always up-to-date. It is best to apply only to companies where the inquiry is neutral at Credit bureau. Loans should always be paid swiftly and when it comes to multiple loans a debt restructuring on just one loan is an improvement in the score. More than one current account or multiple credit cards have a negative impact on the credit score of the credit bureaus.

Payments should always be made punctually, reminders can lead to entries, and even after settlement, they can not be easily deleted from the credit bureaus. In the Credit bureau z. B. every three months, the score recalculated. In the case of an early-repaid loan, your own score changes in the worst case only after a quarter of a year.

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