I used to always prefer to pay later (with no interest), cuz i heard it would prove schufa score but I just received an email from klarna, how in the future they will need to view all my purchases history to make sure it fits my budget and income.
What the heck? I thought EU was better for privacy. If we don’t buy things on credit, we get a bad credit score, and if we do, then we have to sell our data ?
This move is very good, and fucking about time! Some things should NOT be privacy based, because these services like Klarna might work for you, but they are destroying lifes for some who cant manage these kind of things.
They need to be accountable, and they cant if the dont get any information at all.
If you want the most privacy - which doesnt exists anyway, because VISA/Mastercard, Apple or Google Pay and your bank already has it - pay with cash.
This move by the EU is great. Dont act like you had privacy before the 20th of november anyway.
Play stupid games, win stupid prizes.
I think we can’t demonize one part of the system without talking about the other. Credit history has to be maintained incase we want to buy basic things like housing or cars cuz otherwise they are too expensive.
And cash isn’t a viable option due to initiatives like digital euro. Iirc, from next year we can’t buy anything above 3k with cash (there will be some kyc involved) and above 20k is just not allowed.
This law in particular creates reasonable grounds for these companies to collect data about our income and expenditure for eventually implementing dynamic pricing. And I wonder, was there no other way to implement this without sharing our financial data?
Credit scores didn’t exist in the 1950s and people bought houses just fine.
A credit score is already tracking data about you and your history of payments and how much.
Yeah, housing was much more affordable back then.
And based on what I have heard, when you pay out of pocket, it does not show that you are someone responsible vs if you buy on credit and then pay before the deadline. The latter is more stronger proof of financial responsiblity than the former. Not that I agree with that logic
Is credit scores a thing in EU? In Denmark the banks only look at your disposable income and savings in order to grant a loan.
Kinda. In germany we have schufa, and its not just for getting a loan. Every landlord here asks for it if you want to rent an apartment or even some WG (apartment sharing).
I think if a bank were to look into my income and savings, that’s wouldn’t be a problem. I bet they get a lot scruitny from authorities. But companies like klarna and paypal that offers “pay later in 30 day with 0% interest”, don’t. This option was great way to slowly increase your schufa score.
My concern is that, this law essentially gives these companies legitimate grounds to collect this data. Which will eventually be used in dynamic pricing. I think kaufland online is already doing dynamic pricing (annectdotal evidence).
Well TIL. What about credit cards? In Denmark we have our Dankort that is completely independent from US tech. Would something like that increase the credit score?
If we don’t buy things on credit, we get a bad credit score
Huh? Isn’t “credit score” just a US thing? I’ve never once heard of it in a European context or encountered it myself. when I’ve had to borrow money they just requested my last 3 pay slips (only borrowed for my house, and a new car once), and in the case of buying my house I had to show a budget.
OP is in Germany where they have a private database called Schufa that pools information about you collected from banks, mobile carriers and internet providers, and provides a “score” to them as well as to landlords.
It’s borderline legal under GDPR because it doesn’t actually store anything about things like nationality, employment, religion, marital status or sensitive financial information like income, assets, expenses.
The score is based on things like loan existence & repayments, ongoing utility contracts (with privately owned companies), if you’ve filed for insolvency, how often 3rd parties inquire about your score and other circumstantial data.
Generally speaking you’re correct, in most countries there are very clear rules about loans that are based on what other loan repayment you have vs what’s your current income, and there are rules about how far much debt you can take as a ratio of the two (say, you can’t take a new loan if you’re already using 60% of your income to repay previous loans).
Also, the information about loans is typically restricted to this exact inquiry: can this person get a new loan (yes/no) and if yes what’s the maximum they allowed to repay per month (X euro). So the bank knows they can structure a loan to you based on a repayment of up to X per month, but nothing else.
I’m guessing Germany doesn’t have regulation like this (since accessing any information about your income and expenses is forbidden), so Schufa was created to be a (poor) substitute.
Just to add a bit, schufa is also asked by landlords before they rent apartments so this “pay later in 30 days” was an easy way to improve your score
Yeah it’s a big pile of crap. More details here if anybody’s curious:
https://www.reddit.com/r/AskAGerman/comments/1t4pio6/how_are_germans_ok_with_schufa/
Maybe it’s meant as a disincentive to keep people from using services like klarna because too many people aren’t financially responsible enough to handle it.
Sorry you got some benefit out of it, but I would just stop using it after this. It doesn’t help much and if you delete the account it’s one less account you have to worry about getting sold or exposed in a data breach. The EU is better than the US for a lot of consumer protections, potentially including this law, but not necessarily privacy.
Im not sure if this will disincentivize enough people or not. But for sure, this will create reasonable ground to collect our monthly expenditure and income data to eventually use in dynamic pricing
True. If there’s no law against it I’m sure it will happen sadly.
Klarna is already a privacy nightmare anyway.
Yeah, true. I mostly used it for 2 things, some form of buyer’s protection and this pay later with no interest.
