It's high time this issue gets sorted out by the courts and Schufa is finally forced to change their malicious business model.
On the one hand, I think Schufa is collecting a lot of unnecessary data that they should'nt have access to. For example, when I bought a pre-paid SIM card in Germany the provider did a Schufa check. No idea why.
On the other hand, I get why a credit score can be useful for larger purchase decisions. If I was a bank, I'd like to know if the person I'm lending 400k for a property, has in the past defaulted on any loans.
I genuinely don't know what a good middle ground is though.
“Has this person defaulted before?”
If someone wants to borrow huge sums from a bank the bank should take the risk and price it appropriately.
If someone wants to borrow money to buy a TV the seller should take the risk and price it appropriately.
The current solution seems too invasive for what it provides. How is the world better because Schufa knows someone bought a prepaid phone card and can sell that to an online store when you buy a pair of shoes and choose to pay by invoice the next week?
Something is in theory cheaper somewhere but where is the proof? The only hard data we have is that Schufa and companies like them are making billions, so there is certainly money to be saved by someone somewhere by scrapping this.
Yes, but the point is that they can use your credit score to make more fine-grained assessment of risk.
Should an auto insurance company offer the same rate to a 97 year old blind driver with a history of accidents as they would to a 30 year old in good health with no tickets? What about the 16 year old who just passed his driving test yesterday? Clearly these three people present vastly different levels of risk to the insurance company and, even though it is certainly possible for the insurance company to do so, it would be stupid to ask them to pay the same rate.
The bank is simply doing the same thing: Pricing risk appropriately. The fact that they offer significantly different interest rates to different groups (or decline to offer credit entirely) just shows that these signals are effective at measuring risk.
> How is the world better because Schufa knows someone bought a prepaid phone card and can sell that to an online store when you buy a pair of shoes and choose to pay by invoice the next week?
Well, the shoe store is extending you credit, so it would seem appropriate for them to want to, as you put it, price the risk appropriately. The fact that you have recently undertaken other credit obligations is suggestive (yes, not conclusive, but still suggestive) that you may be in a precarious place financially and thus statistically more likely not to pay your credit on time.
The amazing thing of living in the modern connected world is that we have all sorts of information available easily. We can use what other countries are doing as inspiration, or as learnings what not to do.
The problem you're describing has been solved for decades in tens of countries around the world, there's no point in reinventing the wheel. In France what the bank does is ask the national bank about the person's credit history, which will only contain current and past loans, lapses in repayments, being sent to collections, etc. So only stuff that is actually relevant to the question "has this person defaulted on loans previously and are they thus a risk of defaulting again", which together with the information about current revenues is all they need.