About creditworthiness and how you can influence it

What does creditworthiness mean?

Creditworthiness evaluates a consumer’s financial and personal reliability. It is reviewed before entering contracts, approving loans, or during online purchases to assess the risk of default. To facilitate this evaluation, data is collected and stored.

How is creditworthiness data regulated?

• The primary legal provision for handling personal data is the right to privacy under Article 13 of the Swiss Federal Constitution.
• The Swiss Federal Act on Data Protection (FADP, DSG) (in German only) governs the collection and storage of personal data, including data related to creditworthiness.
• A key update to the FADP, effective from 2020 and mandatory since September 2023, enhances transparency requirements concerning the data collected, its purpose, use, and potential sharing with third parties.
• The Federal Data Protection and Information Commissioner (FDPIC) oversees compliance with federal data protection laws. They periodically verify the legality of data collection by credit bureaus, lacking authority to issue directives but able to supervise and recommend changes to data protection rules and practices.

Who evaluates and stores your creditworthiness data?

The primary entities managing creditworthiness data are credit bureaus. They aggregate information from public sources, such as the commercial register, to depict business relationships. Not all sources are Swiss-based – data on money laundering or related sanctions, for instance, is also sourced internationally.

More critical for most individuals, however, is payment experience data, supplied by companies collaborating with credit bureaus. These firms access customer data when a legitimate interest exists, contributing their own insights to enhance credit profiles.

Companies querying this data need not be Swiss-based – ordering goods abroad is now routine. If you purchase on account from a German online shop, they’ll likely assess your creditworthiness to approve the transaction. Access is restricted to firms within the European data protection area, which, like Swiss entities, must adhere to Swiss data protection laws.

The four main Swiss credit bureaus storing data on individuals include:

• Intrum Ltd.
• CRIF Ltd.
• Dun & Bradstreet Switzerland Ltd. (formerly Bisnode)
• Schweizerischer Verband Creditreform

Just as European firms can tap into these databases, Swiss companies may consult European ones when needed, provided there’s a legitimate interest. For loans, German credit bureau data might be used if Swiss borrower data is insufficient for a risk assessment. Notably, the ZEK (Central Office for Credit Information) plays a key role in loan-related credit checks.

Learn more:

Who accesses your creditworthiness data?

Private individuals cannot access others’ creditworthiness data. Companies require a contractual agreement with a credit bureau to do so.

To access this data, firms must comply with data protection laws and provide evidence of legitimate interest for each request.

This evidence typically stems from your consent – an order, contract offer, or form submission.

In essence, any company entering a contractual relationship with you, involving financial risk, may have grounds to check your creditworthiness.

Examples include:

• Purchasing on account, particularly in e-commerce
• Renting a flat
• Using a loyalty card with payment features
• Applying for roles involving sensitive financial data or client funds (in specific cases)
• Signing up for a mobile phone contract
• Taking out insurance
• Securing mortgages, leases, or loans

Your consent for these checks is generally secured through the general terms and conditions.

How can you review your creditworthiness?

Under the Federal Data Protection Act, you’re entitled to access data stored about you, including creditworthiness data from credit bureaus, free of charge once annually.

It’s crucial to understand that the company accessing this data interprets it, and its evaluation varies by purpose.

Checking your data is advisable, as it impacts your daily life and ability to enter various contracts.

You can request this information directly from:

• CRIF self-disclosure for individuals
• Intrum Ltd self-disclosure for individuals
• Dun & Bradstreet self-disclosure for individuals
• Creditreform self-disclosure for private individuals

If you identify errors in your creditworthiness data, you may request corrections or deletions in writing, supported by evidence.

Should a lack of creditworthiness data disadvantage you, you can voluntarily register with these bureaus.

What influences your credit history?

Payment behaviour data is the primary indicator for evaluating an individual’s creditworthiness.

This includes:

• Payment experiences with companies, such as in e-commerce (positive or negative)
• Payment reminders
• Debt enforcements actions
• Debt collection processes
• Loss certificates
• Bankruptcies

Details like the date, amount, and status (paid, pending, or unpaid) are also recorded for these entries.

To accurately link this data to you, it’s connected to identity details – typically your first and last name, date of birth, and residence, if available.

Credit score

Credit bureaus calculate a «credit score» based on stored data, each employing its own scale.

As noted, companies assess creditworthiness data differently.

For loans, unpaid debts and negative payment records from credit bureaus are key factors. Some lenders consider the score when deciding to approve a loan or set its interest rate.

The evaluation of your «credit score» varies by lender, with additional data from sources like the ZEK and IKO also factored in for lending decisions.

Conclusion: What is a good credit rating?

Your creditworthiness reflects your payment history and demographic traits. In short, the more frequent and severe your negative payment records, the greater the impact on your creditworthiness.

For instance, isolated reminders, if settled later, don’t automatically harm your creditworthiness. The time elapsed since such events also matters.

Credit bureaus, which supply this data, use varied scores and scales, but interpretation rests with contractual partners, not the bureaus.

Thus, what defines good creditworthiness hinges on context, purpose, and the company you’re dealing with, defying a universal answer.