Schufa judgment on credit reports

The European Court of Justice (ECJ) has ruled in a case involving Schufa and the Data protection ruled that Schufa’s automated generation of creditworthiness assessments violates EU law if it is used as the decisive basis for credit decisions.

Furthermore, credit reporting agencies may not store data from public records, such as insolvency court registers, for any longer than the insolvency court itself does. This decision could have far-reaching implications for the business models of credit bureaus and their interactions with other companies, such as banks and retailers, as it directly affects the practices of credit bureaus like Schufa. It calls into question the permissibility of the automated generation of creditworthiness assessments and the long-term storage of data from public registers. This could mean that Schufa and similar companies will have to revise their data collection and—processing will need to be revised to comply with the requirements of the GDPR. This, in turn, may have implications for banks, retailers, and other companies that use such data.