This short study on "Credit Scoring in Austria", conducted in cooperation with the Austrian Chamber of Labour, examines the situation in Austria, illuminates technical developments and tries to present the stakeholders and their interests in order to find possible needs for regulation.
Based on the idea of protecting creditors in Austria and in other countries, credit protection companies and credit reporting agencies occurred. In recent years, at the EU level, various regulatory initiatives were started, which also point in the direction of bankruptcy protection. Besides the legislative conditions it is mainly technical developments in the field of databases, data mining and scoring models that create new problems and issues in the areas of consumer protection, privacy and informational self-determination.
The international debate on "social sorting" – the influence of so-called virtual "data doubles" on the real lives of people – is ongoing. Although the Data Protection Act 2000 prohibits so-called “automated individual decisions”, meaning that no individual is to be discriminated on the grounds of available digital processes only, it is likely that the computerized processing and merging of consumer data with corresponding effects is a reality in Austria.
In some industries, lists of clients with insufficient credit are used and increasingly enriched with consumption data and consumer profiles, in order to manufacture advanced credit profiles. This leads to more and more inequality and economic disadvantages for individual consumers, without allowing them to understand the basics of the decision relating to them.
This study aims at explaining the underlying mechanisms of credit scoring. We will analyse the situation in Austria in order to come up with recommendations for future regulation.