Consumers often equate the term “Credit Bureau” with an existing negative characteristic; in fact, the credit protection association mainly collects neutral information such as the conclusion of loans or mobile phone contracts. Households mostly see only financial liabilities as debts; they often only use the term when they have difficulty repaying it.
Take out another loan despite Credit Bureau and debts?
As soon as households take out another loan despite debt and Credit Bureau, they put additional strain on their financial situation due to the new loan installments. While taking out new loans to repay current loans seems questionable, buying new home appliances often leads to savings. In the case of a defective washing machine, a purchase financed by a loan despite debt and Credit Bureau is cheaper in the long term than visiting a laundromat and is therefore recommended.
For this reason, the job center grants interest-free loans to service recipients if they are used to purchase essential household appliances. In comparable cases, families with low income receive an interest-free loan from the social welfare office without benefits from the employment agency. When taking out a loan, households that are already indebted make sure that they have enough money to live after paying all the installments. Low monthly installments can be achieved by agreeing on a long loan term.
Who grants loans despite existing debts and Credit Bureau entries?
German credit institutions obtain Credit Bureau information before granting the loan and thus receive information about existing loan liabilities and existing negative characteristics. Credit protection, on the other hand, only communicates negative entries to dealers, but no current loan agreements, so that they are not informed about existing debts. In addition, they often do not make another Credit Bureau request for follow-up orders from existing customers, but instead evaluate the previous payment behavior of their invoices as internal creditworthiness.
Swiss and Liechtenstein banks grant a loan despite debts and Credit Bureau entries, because as a non-contractual partner of credit protection in Germany they cannot make a Credit Bureau request anyway. A prerequisite for lending is a sufficiently high income. It is also possible to borrow from a pawnshop if the consumer has a sufficiently valuable deposit. The pawnbroker does not ask for existing debts or Credit Bureau entries, but secures his repayment claim solely through the pledge to be deposited. The pledge loan is suitable for small sums and short loan terms and is often used as a loan despite debt and Credit Bureau.