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Credit Scoring

What is Credit Scoring?

The Credit Scoring refers to a statistical method that can be used to assess the creditworthiness of consumers. A score indicates the likelihood that a customer will pay a debt. It is used by banks as an important basis for their lending decisions; in the case of loans with interest rates dependent on creditworthiness, the score value also determines the individual interest rate. Other companies also use these score values, which come from credit agencies such as Schufa.

What factors play a role in the credit scoring process?

Schufa and other credit reporting agencies do not disclose the exact formula for calculating score values. What is certain is that they include personal financial data such as a personal insolvency proceeding. In addition, according to experts, they include general statistical data such as place of residence.

Among other things, a Credit Scoring is likely to contain these aspects:

  • Payment delinquencies and legal actions such as foreclosure
  • Number of loans
  • Frequency of account changes
  • Occupation
  • Residence

Credit agencies such as Schufa usually calculate industry-specific score values in addition to a general score value. This is due to the different default risks. A default on a consumer loan, for example, is more serious than an unpaid invoice from an online retailer. Accordingly, Schufa and Co. apply stricter standards for banks at Credit Scoring.


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