We crack the Schufa, the German credit scoring

Last week the Open Knowledge Foundation Germany (OKFDE) and AlgorithmWatch launched the project OpenSCHUFA. Inspired by OKF Finland and the „mydata“ project, OpenSCHUFA is the first„mydata“ project by OKFDE. Over the last 7 days, the campaign generated Germany-wide media attention, and already over 8.000 individual Schufa data request (30.000 personal data requests in total).

Why we started OpenSCHUFA and why you should care about credit scoring

Germany’s leading credit rating bureau, SCHUFA, has immense power over people’s lives. A low SCHUFA score means landlords will refuse to rent you an apartment, banks will reject your credit card application and network providers will say ‘computer says no’ to a new Internet contract. But what if your SCHUFA score is low because there are mistakes in your credit history? Or if the score is calculated by a mathematical model that is biased?

The big problem is, we simply don’t know how accurate SCHUFA’s or any other credit scoring data is and how it computes its scores. OpenSCHUFA wants to change this by analyzing thousands of credit records.

This is not just happening in Germany, or just with credit scoring, for example the Chinese government has decided to introduce a scoring system by 2020 that assigns a “social value” to all residents. Or think about the Nosedive episode of Black Mirror series.

We want to

  • start a discussion on that topic
  • bring more transparency towards (credit) scoring
  • empower people with their own data and show what can be done once this data is donated or crowd-shared

What exactly is SCHUFA?

SCHUFA is Germany’s leading credit rating bureau. It’s a private company similar to Equifax, Experian or TransUnion, some of the major credit reporting agencies operating in the US, UK, Canada or Australia.

SCHUFA collects data of your financial history – your unpaid bills, credit cards, loans, fines and court judgments – and uses this information to calculate your SCHUFA score. Companies pay to check your SCHUFA score when you apply for a credit card, a new phone or Internet contract. A rental agent even checks with SCHUFA when you apply to rent an apartment. A low score means you have a high risk of defaulting on payments, so it makes it more difficult, or even impossible, to get credit. A low score can also affect how much interest you pay on a loan.

Why should you care about SCHUFA score or any other credit scores?

SCHUFA holds data on about 70 million people in Germany. That’s nearly everyone in the country aged 18 or older. According to SCHUFA, nearly one in ten of these people living in Germany (around 7 million people) have negative entries in their record. That’s quite a lot.

SCHUFA gets its data from approximately 9,000 partners, such as banks and telecommunication companies. SCHUFA doesn’t believe it has a responsibility to check the accuracy of data it receives from its partners.

In addition, the algorithm used by SCHUFA to calculate credit scores is protected as a trade secret so no one knows how the algorithm works and whether there are errors or injustices built into the model or the software.

So basically, if you are an adult living in Germany, there is a good chance your life is affected by a credit score produced by a multimillion euro private company using an automatic process that they do not have to explain and an algorithm based on data that nobody checks for inaccuracies. And this is not just the case in Germany, but everywhere were credit scores determine everyday life.

How can you help?

Not living in Germany? Money makes the world go round.

Please donate some money – 5 EUR, we also do take the GBP or USD –  to enable us to develop a data-donation software (that is open source and re-usable also in your country). Get in touch if you are interested in a similar campaign on the credit bureau in your country: openschufa@okfn.de

And now some of the famous German fun, our campaign video: