WIESBADEN (dpa) – Be it for a cellphone or a new bank account, no transaction in Germany goes without a credit rating clause in the sales contract.
Around 57 million people in the country, when they sign a cellphone network contract, or order something via a mail order catalogue or a new rental agreement, are also signing their names to the fine print which says they agree to their data will be made available to the credit rating company Schufa.At Schufa headquarters in Wiesbaden and in its various offices around the country are stored some 300 million files filled with facts and figures, information which many people would prefer to keep to themselves.Who has an account, and where, or whether one is a mail order customer is kept on record, as is such information as outstanding loans, and whether a person has received warnings for non-payment or has had credits cancelled.A negative report from Schufa, which any bank clerk can call up from the data bank within seconds, almost inevitably means that a person can forget receiving a loan.It is no wonder, then, that consumers are not so enthusiastic about the credit rating company and that data protection lobbyists view the huge collection of sensitve financial information with mistrust, admits Schufa boss Rainer Neumann.But the mathematician and former Post Bank manager hopes to use the ongoing 75th anniversary of Schufa to try to give his low-profile institution a bit more favourable publicity.Neumann says, for example, that when a person is declined a loan, this not only protects the bank from a possible non-performing credit, but also prevents the person from falling deeper into debt.He said that Schufa gives out information 60 million times a year, and that only in a tiny fraction of a percentage of the cases is the information faulty, though this of course might be a cause of embarrassment to a customer.And, if people want to know what Schufa has on file about them, all they have to do is order their own dossier for 7.60 euros (6.75 dollars).The credit rating company was set up in 1927 by the Berlin electricity utility Bewag and the electrical engineering company AEG. It was during the economic boom years of the 1920s that Bewag began selling electric home appliances on the installment plan and needed a system to reduce the credit risk involved.Within two years, Schufa already had files on around 1.5 million customers paying for goods on the installment plan.Today, Schufa Holding AG in Wiesbaden heads a group with 630 employees in 13 sites around the country. It has two competitors but is by far the market leader. During the past two years it posted growth rates of six and eight per cent.In 2001, Schufa posted revenues of 55 million euros. Its owners are banks and commercial enterprises which as a rule pay 65 to 70 cents for each information request. Neumann said that the economic slump also hurt income in the first quarter of 2002, but that the company made up for the slack with new products.Among these is the practice called “Scoring” set up in 1996 and which is demanded in about half the credit information requests. The bank employee asks a customer not only about past loan rejections but also applies certain statistical methods to wager a prognosis about the person’s future loan repayment behaviour.The data of the loan applicant are compared with the millions of other data files so that the applicant is rated, or “scored” on a scale of 1 to 12.Schufa has just sold this scoring method – which is kept a strict secret – to the Netherlands.Further income might be expected as a side effect from the new old-age pension scheme established by Labour Minister Walter Riester, with Schufa organising the exchange of personal credit data between life insurance companies, customers, and official authorities. The new system is to be in place by the end of this year.Neumann dismisses critics who see an Orwellian spectre in the comprehensive collection of data in Schufa’s computers about people’s debts and their past credit and purchasing behaviour.He notes that Schufa itself is one of the companies in Germany which is itself under the strongest surveillance. “One third of the data protection law was specially written with us in mind,” he said.
