With a bad Schufa score, people have little chance – for example with a rental agreement or with the electricity supplier. Now the highest court in the EU has decided how much the score can influence creditworthiness.
Companies are not allowed to decide whether to conclude contracts with customers solely on the basis of an automated creditworthiness assessment by Schufa. The European Court of Justice decided on Thursday in Luxembourg that the so-called Schufa score should be viewed as a fundamentally prohibited “automated decision in individual cases” if Schufa customers give it a significant role in the granting of credit.
Banks, telecommunications services or energy suppliers usually ask private credit agencies such as Schufa about a person’s creditworthiness. Schufa then provides an assessment, the so-called score value. This is intended to show how well the person concerned fulfills their payment obligation.
The background to the proceedings before the ECJ is a case from Germany. In one of them, a person who was denied a loan asked Schufa to delete an entry and give him access to the data. Schufa told him his score and general information about the calculation, but not the exact calculation method.
The Wiesbaden Administrative Court referred the case to the ECJ in order to have the relationship with the General Data Protection Regulation (GDPR) clarified. The GDPR stipulates that decisions that have legal effects on people must not only be made through the automated processing of data.
Court in Germany still has to rule on Schufa score
The judges in Luxembourg have now decided that scoring falls under this category and is only permitted under certain conditions. Schufa customers are unlikely to attach a significant role to the score when granting a loan. The Wiesbaden Administrative Court must now decide whether the German Federal Data Protection Act contains a valid exception to this ban that is in line with the General Data Protection Regulation.
Schufa welcomed the ruling: It provides clarity as to how the scores can be used in companies’ decision-making processes within the meaning of the GDPR. “The overwhelming feedback from our customers is that payment forecasts in the form of the Schufa score are important for them, but are generally not the only decisive factor in concluding a contract,” Schufa announced after the verdict.
Source: Stern
