Your credit history
Two central credit information agencies collect certain information about the credit that you have arranged. A financial services company will check your creditworthiness (ability to repay the credit) on the basis of this data and then decide whether you can be given new credit.
Credit check
The Consumer Credit Act requires commercial lenders to report the consumer's existing commitments to the Information Agency for Consumer Credit (IKO). This helps to keep an account of the borrower's existing commitments during the credit process and thereby improve the consumer's protection against excessive indebtedness.
Before new credit is granted, the IKO must be asked about a consumer's existing commitments. This must be taken into consideration when checking the creditworthiness of the consumer. In Switzerland, the ZEK or Central Credit Information Agency was set up by finance companies. It has been exchanging information with its members about borrowers since 1945.
Creditor’s duty to report
The lender is only required to report consumer credit to the IKO if a customer is in arrears with repayments up to a certain amount. Furthermore, the creditor must notify the IKO if a bank account has been overdrawn over an extended period of time or on several key dates.
The IKO is only given the information that the creditor is required to report under the Consumer Credit Act (CCA). Additional information is saved by the ZEK. For example, it also records rejected applications for credit and borrowing that does not constitute consumer credit within the meaning of the CCA (secured borrowing, for example). In addition to the ZEK and the IKO, there are also other information points.
Get yourself a good reputation
- Draw up a prudent budget. Allow for all your spending, especially fixed outlay, but also variable costs such as going out, presents, cigarettes, alcohol, etc. Seriously bear in mind that you will definitely have to tighten your belt during the term of the credit.
- Be honest: Can you really afford the purchase that you wish to finance with credit?
- Try to predict the changes that could restrict your budget during the term of the credit. Is your job secure? Is the relationship with your partner likely to survive the term of the credit or is there already serious evidence of a crisis? Are you planning to have a baby during the term of the credit?
- Meet the minimum repayments at least - higher payments are always possible, of course.
- If your financial situation takes a turn for the worse and you are no longer able to meet your commitments, it is best to let your creditor know straight away or get in contact with a debt-counselling service.
