> If someone wants to borrow huge sums from a bank the bank should take the risk and price it appropriately.
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.