A credit bureau is a financial services provider which records the way in which individuals and other entities manage debt. Typically, credit bureaus are private companies which harvest many kinds of data related to many different aspects of individual’s lives which could in any way affect their ability to meet repayments of loans or to pay for goods and services provided on credit. They then sell this information to potential lenders who are interested in the creditworthiness of loan applicants, and merchants who want to know the creditworthiness of customers before providing goods on credit.
Information which is typically collected by credit bureaus about consumers includes reports of both unpaid bills and bills which were paid on time, applications for credit cards or other types of loans, existing debt, employment and income, marital or relationship status and children, expenses, the way in which a consumer spend their money, criminal records and many more pieces of data. Credit bureaus use this data to determine whether or not a person is likely to pay their bills or repay loans.
The credit scores provided by credit bureaus to merchants may be either positive or negative. A positive score indicates good creditworthiness and a negative score indicates poor creditworthiness. In some countries, your credit score can determine whether or not you are able to access basic needs like transportation, electric, water or telephone services. Employers may use credit scores to determine whether or not to hire a prospective employee. Because of this, credit bureaus wield significant power over individuals in some countries.
Switzerland’s primary credit bureaus are the ZEK (German: Zentralstelle für Kreditinformation, French: centrale d’information de credit) and the IKO (German: Informationsstelle für Konsumkredit, French: centre de renseignements sur le crédit à la consummation). These credit bureaus are government-mandated. Unlike other credit bureaus, they do not attempt to rate the creditworthiness of potential borrowers. They simply record active loans (including credit card balances) which are being paid off by borrowers. Lenders can use these credit records to avoid giving loans to individuals who are at risk of over-indebtedness, and thus avoid breaking the Swiss consumer credit law. However, these bureaus do not record information which would indicate whether or not an individual is a good payer (a “positive” credit score).
In addition to the two national Swiss credit bureaus, municipal debt collection offices collect information about the unpaid debts of residents, as reported by creditors. Any outstanding unpaid debts are listed on the corresponding individual’s debt collection register statement. Some municipalities operate their own debt collection offices, while others operate joint offices with other municipalities.
A number of private credit bureaus also operate in Switzerland. Typically, the companies which operate these credit bureaus also provide debt collection services.