You are correct, I was unaware of the German case! In fact, it seems that many European countries do have a credit score system. Some do have other systems: https://en.wikipedia.org/wiki/Credit_score#Germany
Here are some countries within Europe who do not have a credit score system:
- Belgium has no centralised credit score system. However, banks can ask the Belgian counterpart of the FED for all loans held in your name when you request a new loan. The national bank keeps a register of all loans.
- United Kingdom: There is no such thing as a universal credit score or credit rating in the UK. Each lender will assess potential borrowers on their own criteria, and these algorithms are effectively trade secrets.
The Experian Credit Rating Agency actually results historically from what happened before CRAs existed.
Last century "Mail order" was an exciting new business opportunity. You send people (mostly housewives) a catalogue explaining what's on offer, and then they pick items from the catalogue and you deliver them. You can have a much broader range of products than their local stores, and the catalogue offers a good way for cautious shoppers to compare options and make a decision at their leisure.
There was a problem. The customer has no prior relationship to you, but of course they don't want to pay you for potentially very expensive goods, in advance, unseen. A local store might know exactly who the customer is, if that's a nice house or a tiny cottage, what the husband does for a living. Your mail order catalogue company has no idea.
So you began to just collect observable facts. Mrs Smith still owes you £208 from last year when she bought the dining room set, and hasn't made a payment on it since January. Mrs Jones on the other hand has paid every penny she owed, regular as clockwork. So when Mrs Smith tries to order a new frock, you remind her about the outstanding £208 by return of post - and when Mrs Jones does you send the frock immediately.
Gradually other new businesses wonder if they might take advantage of this knowledge. Mrs Jones wants to buy a car, cars are expensive but she'd make payment every month. The first dealer she visits suggests her husband should buy it. Mrs Jones doesn't have a husband, and she walks out in disgust, no sale. But the second dealer has an idea, that mail order catalogue company might know if Mrs Jones is good for the money. They agree, for a fee, and on condition that the car dealer tell them if Mrs Jones makes each future payment on her credit deal, which seems harmless enough.
And one day the catalogue company realises that 80% of its revenue is from this "Credit Reference" side business of knowing that Mrs Jones is a better risk than Mrs Smith and the catalogue sales are nice but they aren't really the same business and needn't be the same company.
If it hadn't already happened last century, today Amazon would be your Credit Reference Agency, yet another opportunity to enrich Jeff Bezos...
Really interesting background. I'd not idea this is where it all came from.
It's pretty clear that nowadays with much safer online payments, there's really no need for these credit checks any more -- you pay online, and if you get scammed there's solid proof of whom you paid and how much.
In the UK the electoral register can be purchased by advertisers, etc. You can opt out of this.
The electoral register is also given to the big credit reference agencies. This is obligatory. If you want a vote then Experian (and the rest) get your data.
Credit reference agencies most definitely operate in the UK.
Here are some countries within Europe who do not have a credit score system:
- Belgium has no centralised credit score system. However, banks can ask the Belgian counterpart of the FED for all loans held in your name when you request a new loan. The national bank keeps a register of all loans.
- United Kingdom: There is no such thing as a universal credit score or credit rating in the UK. Each lender will assess potential borrowers on their own criteria, and these algorithms are effectively trade secrets.