Environmental Factors Impacting the Credit Rating
What institutions such as the SCHUFA and other credit reporting agencies have been denying for many years, is now thanks to a new EU directive in the awarding of a credit to the fact in the credit rating: the so-called GEO scoring ! What has the “fateful” about this geo-scoring and its influence on the creditworthiness of a single citizen? Currently not yet, but if this score in the future credit rating will play a crucial role in any credit taking, then the outcry among those involved will be huge! All the more important now to inform about this new EU directive. We explain what is going on with this hitherto little-known credit check procedure.
Credit Rating: Your environment has an impact on this rating!
There are now almost everyday business transactions in our lives: You go into a mobile business and would like to extend its mobile contract and best still take a current smartphone or take it with the desire in the Media Markt or Saturn to use the TOP LCD TV offer! All of a sudden and just as amazed as ashamed you are informed that no new mobile phone contract or installment purchase of the TV is not possible! Please – how can that be? After all, you have no liabilities, a decent job, have sufficient income and at best you are convinced that even at SCHUFA to have a “clean” vest. So what’s wrong?
Good question and just as legitimate, whose answer one finds when looking in the direction of the EU: For from the summer of 2018, a new EU regulation comes into force, which appears to be sensitive to the creditworthiness of consumers. This new EU data protection regulation provides that in the future the own neighborhood can influence whether one can finance the new car or a home with a loan or receive to a new Handyvertrag. What in plain language means that in the future, the creditworthiness of a whole district in the rating of the creditworthiness can enter – what then just the so-called GEO scoring is! With the implementation of this EU directive, the previous strict standards that apply in Germany when taking out a loan would then be “officially” significantly softened. After all, insiders have been claiming for years that the GEO scoring would have been used long ago anyway. In this respect, this behavior thus gets from 2018 only an “official” legitimacy.
The current situation in terms of creditworthiness and what consumers expect from 2018!
The EU Regulation requires that the address be included in the credit assessment. If the neighbors do not pay their mobile bills on time, have misjudged the real estate loan or bypass the maintenance payments, other consumers in the neighborhood could also receive a lower credit rating in the future. So far, the address can not be used solely for the evaluation, another feature is required by law. To date, the Federal Data Protection Act also prevents, among other things, that unresolved liabilities have an impact on creditworthiness, which means that unjustified claims, which still have to be heard by the courts, have not been included in scoring in Germany since 2010. However, the new EU Directive also includes those financial claims in the credit check, which may then be in the way of a loan or a contract. Hard times are getting on borrowers!
Editor: Markus Gildemeister
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