Schufa warns: Consumers often have to buy on credit because of inflation

Companies appreciate the Schufa because the credit report warns them of customers with unworthy credit.

Consumers, on the other hand, associate mixed feelings with the Schufa, because if the data service makes a negative judgment, this means: There is no mobile phone contract, no television financed on installments, no new car or online shopping only with advance payment.

Mark Fehr

Editor in Business.

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Because the check of an average of 300,000 cases per day usually runs smoothly and unnoticed, private individuals only take notice of the Schufa if they are denied a coveted purchase on credit due to poor creditworthiness.

As a result, the company carries around a negative image.

In addition, consumers are not clear what data Schufa stores about them and how they make their judgment.

The company now wants to remedy this with a transparency offensive, as Schufa boss Tanja Birkholz promised to journalists in Frankfurt on Tuesday evening.

"We have an excellent reputation among companies, which is quite different from the public," said Birkholz.

Schufa achieves 70 percent of sales with corporate customers,

Since inflation coupled with the expected recession is eating up the savings of private households, fears of bad debts are likely to increase among companies.

Therefore, the creditworthiness information from Schufa is also gaining in importance for the economy.

According to Birkholz, if every customer received credit regardless of their creditworthiness, 12 percent of the receivables would default.

With credit management, however, the default rate can be reduced to 2 percent.

According to a survey conducted by the Schufa in May, 40 percent of consumers fear that they will no longer be able to earn a living because of the accelerated inflation caused by the Ukraine war and the energy crisis.

More and more households need a loan to maintain their standard of living.

The proportion of these households has increased from 10 to 14 percent.

According to Birkholz, this can also be seen from current Schufa data.

The number of new loans reported to the credit check from September 2021 to August 2022 increased by more than 8 percent.

And over the same period, the number of loan requests increased by 16 percent.

"Something's brewing," said Birkholz.

That banks and companies, in the face of the economic downturn and rising interest rates, are even more careful about who they lend to

While Schufa mainly collects information about the creditworthiness of private individuals, similar providers such as Creditreform focus on data about the creditworthiness of companies.

But who monitors Schufa?

Because of the importance of creditworthiness data for the financial sector, one might think that this is also a task of the financial regulator Bafin.

However, it is not responsible for Schufa, at most for marginal aspects of business with cooperation partners.

The monitoring of Schufa, on the other hand, is mainly carried out by data protection authorities.

The business of the Schufa has grown strongly, to which the boom in online trading has contributed.

Online shops request data about their customers and their creditworthiness within fractions of a second before offering them the convenient purchase on account.

Portals for comparing loan conditions on the Internet have also boosted the Schufa business, because debtors use the platforms to query the conditions of numerous banks, which then call up all the information about their creditworthiness.

Schufa’s clients include not only banks and mail order companies, but also department stores and municipal utilities.

According to Birkholz, Schufa has doubled its sales due to strong growth and tripled its operating profit (EBIT).

This has made the data and technology company a coveted takeover target.

However, a takeover attempt by the financial investor EQT recently failed due to resistance from the Volksbanken and savings banks, which secured their majority in the Schufa.

Many consumers would like to know more about what data the credit rating agencies store about them and how they make their credit rating.

The Schufa does not store any data about income and assets, but about bank details and credit card or mobile phone contracts.

Birkholz announced that private individuals will soon be able to simulate their Schufa classification via the Internet.

They should also gain insights into which voluntary information they can use to improve their creditworthiness.

"If you cancel your checking account, we delete the data and it is unknown," Birkholz explained.

It could therefore be in consumers' interests to provide more information about their financial circumstances.