The ECJ ruling: a victory for the consumer?
We've all been there: you apply for a cell phone contract or a loan, only to be turned down with the message "Your credit rating is insufficient". But what is behind this decision? A completely non-transparent "Schufa assessment", which in many cases is perceived as opaque and unfair. A recent ruling by the European Court of Justice (ECJ) has now reshuffled the cards: consumers now have the right to know how their creditworthiness is calculated. But what does this mean for you in concrete terms?
What exactly did the ECJ decide?
The European Court of Justice has ruled that credit agencies such as Schufa and others are obliged to provide consumers with clear and comprehensible information on how their creditworthiness is assessed. This decision could have far-reaching consequences, not only for the credit agencies, but above all for you as a consumer. Until now, it has been customary for these companies to keep their calculation processes largely secret. This left many of us with a big question mark behind our rejected contracts or loans.
The ruling states that consumers have the right to know exactly what data was used to calculate their creditworthiness and how this data led to the result. An algorithm alone is not enough. The credit agencies must explain the calculation process in such a way that even a non-expert can understand how they arrived at their rating.
What are the specific changes for Schufa?
Schufa and other credit agencies must now explain much more precisely how the creditworthiness score is calculated. Simply stating an algorithm will no longer be sufficient. Consumers must be able to understand why they were rejected, for example, or why their score is lower than that of another person. It is no longer enough to simply present a score figure.
This means that if you are rejected due to your creditworthiness, the credit agencies must explain in detail which of your personal data has been included in the calculation and how this has influenced your creditworthiness. Preventing misunderstandings and ambiguities also becomes a duty of the credit agencies.
A step in the right direction - but not enough!
The ECJ ruling is a small but important step in the right direction. Transparency will be significantly increased from now on, enabling consumers to better understand and claim their rights. Nevertheless, it remains to be seen how the credit agencies will actually implement these new requirements. It remains to be hoped that they will not just be satisfied with half-hearted explanations, but will actually provide real insight into the calculations.
More transparency, but is that really enough?
One can only wonder why it has taken so long for such fundamental issues of data protection and transparency to be clarified. The ECJ may have taken the right step, but in reality it is just a drop in the ocean. If consumers continue to have their creditworthiness assessed using non-transparent algorithms that are not even properly explained, then the question remains: is this ruling really a victory for the consumer - or just an excuse for the credit agencies to continue concealing their practices? It is high time we lived in a world where transparency and fairness are not just buzzwords, but are actually practiced!
