Scoring is a statistical method used in many fields to obtain information regarding the future payment behaviour of individuals and companies. This scientifically developed method has been used by credit institutions, credit agencies and rating agencies over many years to assess creditworthiness. Consumer representatives and data protection experts are increasingly discussing the question of "What is scoring" since the scoring procedures are to some degree controversial.
Scoring is an analytical forecast and score calculation method establishing the likelihood that a certain individual end customer will display a certain behaviour. In this process, scoring can help to identify the opportunities and risks of a customer relationship early on. Analysis methods determine the optimum selection of characteristics and their weighting in a so-called score card with the help of which a company can best determine the likelihood of certain future behaviour of end customers.
The finance and credit industry uses comparable statistical methods to prepare a forecast of the likelihood of agreed repayment of loans. Credit scoring - which can be used for all types of credit transactions - forms one of the fields of application. Banks use it to assess the borrowers' creditworthiness, i.e. their ability to fulfil their loan liabilities. In the private-customer segment, such analyses and the use of standardised procedures are also required as a result of the implementation of the Basel II Accord.
infoscore Consumer Data GmbH (ICD) is part of the risk management division of Arvato Financial Solutions. Its tasks include the provision of credit rating data and the preparation of scoring solutions. Scoring is a forecast and measuring method in which empirical values regarding solvency are analysed to draw conclusions regarding the likelihood of the customer's default. The ICD scoring procedure forecasts the end customer's expected behaviour and weighs up the likely opportunities and risks.
Following the amendment of the Federal Data Protection Act (BDSG) in 2010, credit rating agencies have to disclose which data are considered in the calculation of the score. For example, Schufa indicates that score values are exclusively calculated on the basis of data included in a Schufa statement. Among them are the question of how often loans are taken out, the number of current accounts, possible payment defaults and recorded default proceedings. However, according to its own statements, Schufa does not use information on nationality, occupation, income or the residential situation of a customer.
The indicators, i.e. the data used in score cards, such as the Informa Consumer Score, or industry scores and their weighting very much depend on the industry using them (e.g. mail order industry, credit industry, telecommunications - including mobile communications - as well as insurances) and the aim of the forecast (e.g. estimation of default risk, cancellation tendency). According to the BDSG amendment, scoring may only be based on relevant data. The score values available from infoscore Consumer Data GmbH fulfil this requirement.
As a statement on the likelihood of satisfactory loan repayment, scoring is very important for decisions on the granting of loans. Banks may reject loan applications without giving reasons if the calculated score is too low.
Consumer and data protection experts, to some degree, have critical views regarding the question "What is scoring?". In their opinion, the determination of this value might include data that only permit an indirect conclusion regarding creditworthiness.
Moreover, score values also include micro-geographic data. In practice, this often happens if no other credit-relevant data are available regarding a person. In some industries, only a small amount of valid data are available. In these cases, external data, e.g. from providers of marketing data, risk data and external score values, are considered in the decision. However, in any case, credit-relevant characteristics whose forecast quality has been validated in comprehensive mathematical analyses for the respective client are used. As a consumer, you have the right to have barred the provision of information on a score established regarding you.