Credit check & Credit bureau information
In Germany, the upcoming purchase of a car is the most common reason for applying for a loan. Automobile clubs and car dealers have also been offering car loans for a number of years, but no credit is approved without checking the creditworthiness. Legislators require German credit institutions to check the creditworthiness of consumers before granting credit (see § 509 BGB), so there is usually no way around Credit bureau. Some reputable banks from Germany advertise with
Credit bureau-free loans – however, without the legally required credit check, the car loan applied for is not approved here either, since the banks usually contact debtor registers or other public directories. These legal requirements for checking creditworthiness may be annoying in individual cases, but are intended to reduce the risk of a credit default for the bank and protect the customer from over-indebtedness.
However, the inquiry to Credit bureau & Co. is always only a part of the credit check, since the bank also checks the amount of income and the existence of other liabilities. Therefore, a bad Credit bureau entry is not always responsible for a negative decision from your house bank.
If you already pay off one or more other loans in installments and do not have negative entries with Credit bureau, the bank can still refuse the car loan applied for. This is the case if the bank fears over-indebtedness and thus a possible default of payment when comparing income and expenditure.
What is the Credit bureau?
Credit bureau Holding AG, based in CreditInfo, is a credit reporting agency whose sole purpose is to provide third-party creditworthiness information to the relevant business partner.
It was founded in 1927 and claims to have collected data from around 5.3 million companies and 67.2 million natural persons. For well over 90 percent of the stored people, Credit bureau only makes positive data entries regarding payment behavior, which in most cases come from banks and other companies as well as from public debt registers.
When Credit bureau receives an inquiry about a customer’s creditworthiness, it usually passes on the relevant information as a score. This is a value, which can range from 1 to 100, and assesses the probability of the loan being repaid. For example, a low value indicates a high risk of the probability of failure.
Saved negative characteristics are also relevant for the requesting credit institution or company, since these often occur when credit installments are not paid. However, if you have already received a dunning notice or if there have been problems with payment in installments in the past, this does not necessarily lead to problems with a conventional car loan. Not all entries at
Credit bureau have a major negative impact on your creditworthiness. If you are unsure whether you have a bad credit rating with Credit bureau, an inquiry can help. Credit bureau undertakes to be transparent about the data stored about itself and will also provide you with proof of creditworthiness if necessary.
Once a year you can request a free self-assessment from Credit bureau, so you always have an overview of the stored information. In addition, you can object to demonstrable incorrect entries and request a correction. Credit bureau is the largest credit reporting agency in Germany.