Have a loan to try and unfortunately to get a loan are two completely different things, because in between something like the holy grail of the financial world and called credit! The credit rating of individuals and companies is THE key to making a decision about whether someone can benefit from a loan and, if so, on what terms. The problem with the whole issue of “credit rating”, however, is that no one really knows how credit bureaus called SCHUFA, Creditreform, Bürgel, InfoScore etc. actually create their credit rating. The individual components of those same reviews are guarded like the Coca-Cola recipe and guarded like Fort Knox. Even German courts have NOT allowed an insight into the practices of those companies. And yet, one of the leading credit bureaus has now allowed a little insight behind the scenes. From this small insight generates a very frightening realization: It only needs 3 pieces of information to create a credit score – with quite fatal consequences for affected persons!
Only 3 criteria for a credit rating?
One should hardly believe that actually based on only three information, a judgment on the financial reliability of a person is made. But exactly this was confirmed by just one of the leading German credit reporting agencies. Certain doubts about the objectivity of such a rating scheme are more than justified, especially if an element called geo-scoring is also used. But actually the fatal are the possible effects on the daily life of a citizen who has been “classified” according to only 3 criteria. If, for example, the bank does not approve a car loan on the basis of such a credit rating, the way to work can become a problem and, in the worst case scenario, it may even lead to unemployment. In plain language, this means that based on only 3 criteria, a threat to existence can arise! But which criteria play a role in credit rating in addition to the aforementioned geo-scoring?
3 criteria of credit rating: Hard to beat in secondary matters!
The three basic elements of a credit rating are the name , the date of birth and the current reporting address . If there is no further information about a person, the credit reference agency uses this information to represent the creditworthiness of a person in the form of a so-called score value that score is the creditworthiness of a person in a statistical value. Which means that it should be as recognizable as how willing and able a person is to meet his payment obligations. Please let this be clear: In the name, the date of birth as well as the address the payment morality is calculated! But basically, this information is anything but a clear conclusion on the payment behavior of an individual consumer. Especially since even at the point “address” just that geo-scoring is used. Means in clearer words, this also has the creditworthiness of neighbors a corresponding impact on their own credit rating (read also this article)! Unhappily, if you live in a prefabricated housing estate, a so-called social hotspot or in the Bahnhofsviertel.
Our conclusion about credit rating
It is unlikely that any information from credit bureaus about consumer payment history and reliability is likely to be fully understood. However, the recent look behind the scenes of a leading credit bureau shows that the criticism of the functioning of each institution does not seem to be without foundation! However, thanks to the current verdict of the verdict, this criticism does not seem to have any influence on the functioning of these institutions in the future.
Therefore, consumers only really have a chance to exert influence: request their own information once a year. Anyone who regularly views the information stored about them with the various credit bureaus has the control over what information the companies have stored. In this case, at least a deletion of incorrect or outdated information can be effected.