Query Credit Bureau Score – this is how it works and how it is calculated

If you deal with loans, you will inevitably be confronted with the topic of Credit bureau at some point. For many, however, it may not be so clear what the Credit bureau Score is all about. But it is an advantage to deal with this matter. We want to answer the most important questions about Credit bureau in this article.

What is the Credit bureau?

What is the Credit bureau?

Credit bureau Holding AG is the largest and most well-known credit reporting agency in Germany. Credit bureau’s task is to provide its contractual partners with information on the creditworthiness of third parties. The contractual partners are, for example, banks that grant loans. With third parties you are meant as a consumer. Credit bureau therefore tells a bank how creditworthy you are. Credit bureau needs and collects the relevant data for this. It also receives this from the contractual partners. In addition to banks, these can also be trading companies or telecommunications providers. For example, if you buy a washing machine in installments or conclude a new cell phone contract, this data will be passed on to Credit bureau and saved together with your contact details.

How is your credit rating measured?

How is your credit rating measured?

First of all: The exact formula for calculating the Credit bureau score is not available to the general public. Credit bureau itself advertises its score procedure as transparent. However, the details are not visible. Only the responsible supervisory authority and the data protection officers of the federal and state governments know the exact formula. This always leads to criticism from consumer protection.

In any case, it depends on the data available. It can even be advantageous for you that data about you have already been deposited with Credit bureau when you apply for a loan. In rare cases, regional or geodata is used if the Credit bureau has no other information about a person. Your credit rating is then determined based on your neighborhood, which can be good or bad. But that is very rarely the case.

Normally, the Credit bureau score is determined based on the business you have already done. Mobile phone contracts, installment payments or loans taken out as well as current accounts are among the things that play a role. Based on this information and how reliably you have met the individual claims, it is calculated how likely it is that you can pay future due dates on time. If you have always paid everything back in a timely manner and the loans you have taken out are proportionate to your income, your Credit bureau score is in a positive range.

How does the Credit bureau score deteriorate?

How does the Credit bureau score deteriorate?

If you do not meet the demands of your business deals, this will have a negative impact on your Credit bureau entry. If, for example, you are in arrears with the installments for a loan, this will be noted in the Credit bureau. But by repaying the liability, the corresponding entry is corrected. However, please note that in such cases only the addition “Completed” is added. The negative note is still visible. A credit despite a negative Credit bureau is possible, but it is offered to you on much worse terms. Generally, individual data in the Credit bureau that are considered to be completed are deleted after three years. Thus, such smaller delays have no long-term impact on your Credit bureau score.

The following factors have a really serious impact on your Credit bureau score:

  • Personal bankruptcy
  • An affidavit
  • Seizure of account or wages
  • A warrant

Such influences are the result of missed payment claims. While some lenders turn a blind eye to the first-mentioned negative entries, for example providers of mini-loans, the latter generally lead to a rejection.

Find out about your Credit bureau score

Find out about your Credit bureau score

Once a year you can request information about your Credit bureau entry free of charge. If you are not sure about the status of your Credit bureau, it does no harm to use this service. Sometimes it can happen that a settled obligation does not automatically disappear. In such cases, you can request a correction of the information and have your Credit bureau entry deleted. This can make it much easier to apply for new loans or other businesses that affect Credit bureau in the future.

 

Why combine consumer credits?

 

There are several kinds of consumer credit. Affected, unaffected, depreciable or renewable, complex terms that must however be differentiated. What are the rates for each? What is the point of grouping them?

The various consumer credits

The various consumer credits

By definition, a consumer credit is a loan granted to you to finance one of your purchases. There are different types of loans:

Revolving credit

If the project is not defined and you want an amount of money available for several purchases, for example, the credit is said to be unallocated. This is the case with revolving credit (previously called revolving or permanent).

Granted by financial organizations, it is not intended for the purchase of goods or services. It provides a sum of money on a specific account with which you finance the purchases of your choice, without the need for proof.

Its repayment is made progressively, within the limit of the financial ceiling defined when obtaining the credit.

His advantages :

    • Flexibility
    • Simple installation
    • Once the amount is refunded, the maximum amount is available again.

 

Consumer credit

It is intended for a specific purpose such as the purchase of a car, furniture, or the performance of work … The loan is therefore said to be affected .

It is often depreciable and granted by banks.

His advantages:

      • Less expensive than revolving credit
      • Monthly payments and cost of credit are known in advance

Please note: the withdrawal period after signing a prior offer is 14 days.

The case of personal loan

A personal loan is a type of consumer loan (with the same characteristics) but which has the particularity in certain cases of being unaffected. You can therefore use it for the purchase of goods (car, furniture, household appliances, etc.), services (financing a wedding, your children’s studies, work, etc.) or to build up cash if necessary.

His advantages:

      • Obtaining without proof
      • Lightened grant conditions

All these credits have higher or lower rates and repayment constraints.

What are the rates applied for each of these loans?

What are the rates applied for each of these loans?

The rates that can be offered to you are:

      • Revolving credit: between 6% and 20% or more
      • Consumer credit / personal loan: between 4% and 8%

Even if they remain high, we are currently seeing a fall in rates, especially on consumer loans. In this context, requests increased by 8% in March after three years of decline (half of the credits granted for the acquisition of a new car).

The main characteristic of consumer credit is their accessibility. We can subscribe several easily and according to our needs. However, we must be careful not to accumulate more than our monthly repayment capacity. The risk would be to move to a debt ratio higher than the recommended 33%.

Have you accumulated many consumer credits? Including revolving credits with high rates? It is therefore in your best interest to group them!

The advantage of combining your credits

The advantage of combining your credits

Pooling credits has several advantages:

      • Restructuring your loans into one credit (even if the rates or duration of old loans were different)
      • A new monthly payment adapted to your current repayment capacity
      • The possibility of renegotiating the rates of some of your loans (subject to conditions)
      • The request for financing a new project or additional cash
      • The possibility of keeping the direct debit with your current bank

Our advice to take advantage of it: make a free simulation on our website. It will allow you to take stock of your situation, but also, to have expertise on the solutions that await you.