A positive entry at Credit Bureau is one of the most important prerequisites for getting a loan at all. But what is Credit Bureau anyway? The term Credit Bureau stands for “Protection Association for General Loan Protection”. It was founded in 1952 and has since been collecting extensive data on German consumers such as the number of existing checking accounts, existing credit and leasing contracts and other outstanding claims, cell phone contracts and the like.
Of course, the most important personal data of name and first name, date of birth and gender are also stored. The size of the file is estimated to be approximately 650 million pieces of information from more than 70 million people.
The purpose of Credit Bureau is to protect lenders from payment defaults of all kinds.
You can use the Credit Bureau data of every person recorded to check their creditworthiness and to recognize whether the risk appears acceptable or not before concluding loan agreements. There are different types of information, so-called A and B information. Credit Bureau information B contains information on the behavior of the person as a borrower. Has he always paid his installments on time, or has he had to be reminded several times?
Information category B is about the total number of all debits, i.e. how many loans and other claims someone has already run. There is also the so-called score value. This indicates the degree of creditworthiness of a person according to a statistical calculation method and can be between 100 (very good) and 1 (extremely bad).
With a negative Credit Bureau entry and a poor score, a potential borrower will have a much harder time getting a loan than with a positive or neutral entry. Nevertheless, under certain circumstances, such a person can also get a loan. On the one hand, there are credit institutions and credit intermediaries that explicitly offer loans without Credit Bureau. And these are by no means always bad “loan sharks” that shamelessly exploit people’s financial hardship, but also serious companies.
Loan cost with higher interest rates
But a healthy level of caution is required to avoid falling for the “black sheep”. In addition, it should be borne in mind that such loans will logically also cost ever higher interest rates because the risk of total default is generally higher for the borrower.
On the other hand, every person should also see a bad Credit Bureau as a warning signal and consider carefully whether they really need a new loan and can still shoulder it financially without getting into serious difficulties. Of course, it always makes sense to first negotiate openly with the house bank in the case of bad credit and a credit request and not with the smallest clerk but with someone who can make decisions.
Maybe the financial situation has improved significantly lately, maybe there are other collateral with which you can get a loan even with bad Credit Bureau. In theory, however, it is also possible that the Credit Bureau information is simply incorrect or out of date. Anyone who accepts this should check their Credit Bureau data. Every person can do this once a year free of charge and, if necessary, at any time for a corresponding fee. The entries can also be checked online.