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Comment by calmoo | Hacker News Reader

Some fun features of SCHUFA in Germany:

1. If you apply for a loan, this affects your credit rating. Yes - not get a loan, or default on a loan, simply by applying for a loan, your SCHUFA can be affected negatively. Especially if you are shopping around for loans, this is infuriating. This happens because your SCHUFA is affected simply by another entity checking your SCHUFA score. This is also really annoying because it can be very hard to get a loan as a recent immigrant to Germany, so you inevitably end up applying for multiple ones.

2. Your SCHUFA score is also affected by where you live, and how many jobs you've had in X years, and how often you move (which is often as a recent-ish immigrant).

3. Services like Klarna affect your SCHUFA - even if you have a perfect payback time.

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Applying for a loan in the US can affect your credit score for awhile, because the system isn’t instantaneous and it’s trying to handle someone requesting (and getting) multiple loans at once.

There are “soft pulls” and “hard pulls” that affect this differently. Usually it doesn’t matter much in the long run of things.

Applying for a loan affecting your credit report also was/is a thing in the UK - but I think banks realised that it was hurting their business (they want to sell you a credit card/loan after all, and aren't going to if people are scared to ask them for it). So now it's a gimmick that's splashed all over their websites that you can get a quote with only a 'soft search' that doesn't affect your report.

Even though, if you log on to the (free) credit reporting service to see your own data - these 'soft searches' are still recorded, so the industry has basically decided that they shouldn't affect your chances of getting credit.

Don't about the UK but in the US there used to be a big privacy problem around people who worked at banks and car dealerships looking up credit reports for non-business reasons. Soft inquiries are a way to combat that by making every request to view a person's credit report into a recorded event that the person can see.

Regarding 1): This can be avoided by having an agency asking for loans for you, as those requests are not directly linked to you as far as Schufa is concerned.

Most of the time so, you can easily ignore Schufa in your dqy to day live. They suck to deal with for mortgages, loans and appartment rental so. And they over step their authority and abuse their power all the time, without cobsequences for them so far. Hope that changes soon.

What is an example of such an agency?

These aren’t random factors though, they are all correlated when higher risk of default.

Would you like the models to ignore these predictors of financial strength? Because, you don’t like it?

I'm sure you would change your opinion when you immigrate to a new country, have to move around to different apartments because of a massive housing crisis, and then find an apartment long term and get accepted, and then get rejected based on your SCHUFA because you moved around multiple times and perhaps opened a bank account or two.

As the previous person pointed out, these predictors have cases when they are obviously wrong.

Solely relying on statistics will have people falling through the cracks.

A perfect example of when thinking only in averages, and using trendy data-first approach leads to awful and stupid results for groups with too little size to matter statistically. Make your models fair, ffs!

To note, SCHUFA requires all requests to contain a feature code describing the GDPR-"legitimate reason" for the request, and only some affect credit. But those consuming the API have long sent wrong codes, and nobody in the chain cares.

Using a service like Klarna means you're bad at dealing with money, so it makes sense.

It isn't. I financed my phone for free via Klarna. I could easily pay it at once but why would I. In the end I save a bit because of inflation.

> I financed my phone for free via Klarna

So how do they make money? Sounds like they would be losing money to inflation by offering that service for free.

> So how do they make money?

Generally the logic on "free" financing by the seller is that without it, they may have not made a sale at all. Sure it cuts into their margins, but offering rebates would have had a similar effect.

Klarna probably still charges the vendor a few bucks for handling the thing.

https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

They make money because they know that if you need to use Klarna to finance a €300 purchase you are very likely to default on the loan and pay interest.

Bad at dealing with money isn't necessarily true. Better to say "has outstanding financial obligations."

Unless either your salary or the price of the phone increased in those months, you didn't save anything.

Or if there was literally anything else he'd prefer to buy up front than wait until he'd saved up enough to replace the cost of the phone.

The price of the phone and the installment amounts are fixed at purchase. If there is a positive inflation rate you are guaranteed to make a real saving (but not a nominal one) by paying some of the purchase amount later on. What happens to your salary or the price of the phone later has nothing to do with it.

He can't predict the future. The relevant metric must be

1. The chance, weighted by amount, of a price hike/salary increase

2. The chance, weighted by amount, of a price decline/salary decrease.

As inflation is generally an upward trend, clearly no. 1 is more likely and thus the best bet.

Another advantage of financing even though you would have had the money on hand is that you have more liquidity/the option of doing something with that money in the meantime.

Also someone may have some assets they could turn into liquid cash if I really needed to but may not have a lot of liquid cash on hand, so there would be little risk in paying something in installments as long as their assets would be enough to cover it in a pinch.

While liquidity is a reasonable argument, I only know this from "rich people doing things/investments"; e.g. not selling shares in your company when building a new house, or a company building a warehouse.

I am not sure it actually applies to the cost of a phone. Chances are, if those matter, you'd be better off with a cheaper phone to begin with. (Substitute phone with other luxury articles).

Just by keeping that money in a savings account you'd save something.

I use Klarna (albeit rarely) to only pay _after_ any returns are completed and only the amount I need. Not pay upfront and then wait good know how long for three online shop to return my money. I always pay well before the deadline.

My bank just scraped virtual cards and I use them for online payments so I wanted to use Klarna as a virtual card. Went through the whole process only for it to fail at the end with Klarna saying that they can’t generate that card, but I should go talk to Schufa or Arvato about it.

So, not all use cases are bad and Schufa should distinguish between them.

Huh? Aren't they try to be mainly a online payment provider like paypal? That is how I used them couple of times. Money straight from my bank account via them, towards the shop.

They also provide payments plans (pay in 3/4 instalments, or over a year or two) which often, but not always, charge exorbitant rates. I've bought stuff split over 3-4 instalments multiple times for free or for a minimal processing fee (like 3 euros to pay 1600 euros in 4 instalments over 4 months). Always for stuff that I can afford outright, but would prefer to split the costs over multiple months.

They probably make their money from the seller who banks on the fact that people would be reassured of being able to afford the high priced item, and thus be making more sells than otherwise.

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