Credit bureaus: What are the alternatives to Credit Bureau?
What is a credit agency?
Credit bureaus are private-sector companies that collect data about private individuals and evaluate them in order to be able to assess the creditworthiness of these people. Not only banks can turn to credit bureaus, but all companies that have a “legitimate interest” according to the EU General Data Protection Regulation (GDPR). For example, if you want to pay for a washing machine in installments, the dealer can contact a credit agency to obtain credit information about you. That means: to find out how reliably you have paid in the past and how you are likely to behave in the future.
The definition of the credit agency could therefore be: If banks are the heart of our economy, credit agencies are their immune system. Banks supply the entire cycle with money, credit agencies should quickly identify and contain risks for this cycle. For example: You need money to finance a house. So go to a credit institution and apply for a loan. Before the bank approves it, it wants to know: how big is the risk that it will not get the money back? The bank asks a credit agency such as Credit Bureau for a credit check.
Which credit agencies are there?
The most famous credit agency in Germany is Credit Bureau, but it is not the only one. There are also alternatives to Credit Bureau for credit information. Four players share the credit assessment market: In addition to the market leader Credit Bureau, the Creditreform Boniversum, CRIF Bürgel, and Infoscore Consumer Data.
The Credit Bureau
The Credit Bureau (Protection Association for General Loan Protection) stores data records on over 67 million citizens. To do this, Credit Bureau accesses public directories, such as commercial registers and databases on legal proceedings. She also works with 9,500 companies: trading companies, banks and telecommunications companies share information about their customers’ payment discipline. Credit Bureau is a holding company, 87% of its shareholders are banks, the rest are trading companies and others. You can get more information in our Credit Bureau article.
Creditreform Boniversum, also simply called Boniversum, has records on around 55 million German citizens. Like the Credit Bureau, the company uses sources such as public registers such as entries in the commercial register or debtor register, balance sheets and business reports, written supplier inquiries, payment experiences of corporate customers and knowledge of debt collection procedures.
The company, merged in 2016 from the two credit agencies CRIF and Bürgel, obtains its information from the same public sources as the other competitors. She supplements this with data from her partner companies. CRIF Bürgels data pool records entries of approximately 56 million people.
Infoscore consumer data
The credit agency is part of the Arvato company of the Bertelsmann Group and has stored over 40 million data points from around 7.8 million German citizens.
Good to know: Credit agencies serve the needs of banks and retail companies with their scores. But there are also companies whose services are primarily aimed at consumers. One of them is bonify, for example, which works together with Creditreform: the Berlin start-up helps to collect the creditworthiness information and use it for its own benefit. Another provider is it’s my data from Munich. The company offers support in enforcing its own data protection rights and issues its own credit certificate.
What does a credit agency know about me?
The various credit reporting agencies basically follow the same procedure: they collect names, age, gender, and current and previous addresses. The credit agencies need this information to identify people precisely. However, the legislator sets limits on this curiosity: According to the GDPR, it should not be recorded whether you are single or married, what you earn, how much money you saved, or which securities accounts you have. However, the credit bureaus may save whether you have previously noticed poor payment behavior. To do this, they collect data from dunning and collection procedures or use publicly available information about bankruptcies, affidavits and arrest warrants.
However, these records are only half the service. A credit agency uses this information to calculate a so-called score, such as the Credit Bureau score: This value not only provides a quick reference value to assess a person’s previous payment discipline. The score assigns you to a comparison group with comparable characteristics using statistical methods. The experience of how reliably people from this comparison group have paid debts in the past will also be accepted for you.
What can lead to a bad credit score?
The credit agency therefore knows whether you have or had loans anywhere, whether there is a collection procedure against you, and whether you have been reliable and paid debts so far. But what does the credit agency do if there is no data about you? So if you have never taken out a loan and have no other information about your payment history? Nevertheless, the credit agency will calculate a score that looks at your personal data. Do you move frequently? So it can happen that you get a bad score even though you earn well and have no outstanding debt. However, according to law, the credit agency must use more than just a person’s address to create a score.
Credit bureaus do not have to disclose exactly how they calculate their respective score: According to the judgment of the Federal Court of Justice (BGH, judgment of January 28, 2014, Az. VI ZR 156/13), this is a business secret.
How do I request information from a credit agency?
The credit agencies also make mistakes in their calculations. A survey by Boniversum among around 1,000 consumers showed that information was incorrect in a total of 20% of the self-reports requested, in 11.8% of the data records they were even incorrect entries for debt collection processes or the like. It also happens that cell phone contracts that have already been terminated are continued, or multiple places of residence are accepted through typing errors, which is interpreted as a frequent change of residence and leads to poorer forecasts. Of course, there can also be confusion.
It is therefore very important that you regularly request information from the credit bureaus. This way you can check whether your score is justified there or whether you can have incorrect information deleted. According to Art. 15 GDPR you have the right to request free self-disclosure (data copy) from each of the credit agencies at least once a year. The credit agency must provide the information within one month of your application. In the following we explain how exactly this works.