The report describes the operating procedure of two trade information agencies that provide suppliers of services and products with information on the creditworthiness of customers. Generally the information agency analyses the clientele of the supplier concerned. They can identify important indicators and determine the mutual relationships between them. In this way a ‘score card' can be made and used to establish whether or not a potential client is eligible for acceptance.
In the credit scoring process there are three levels of research applied to a target. Combining the results determines whether a recommendation regarding the potential client is positive or negative. Information can be collected on a socio-demographic level (a general statistical approach). Data on the residential environment (often a postal code area) such as percentages of rented and privately owned houses, the division of labour in the area, average income etc are collected. It is also possible to score on the address level. With these keys the database can be searched for the address and house number of the potential customer. In this way any negative payment experiences can be verified. It is also possible to search for name and address. These key words are used in the database to search for bad payer experiences. A combination of all these results determines the final score. If this score is above a particular acceptance level, the customer will generally be considered acceptable. If the score is below the limit, the customer will generally be turned down.
Citation
Wishaw M.S., Mr. R.W.A., De gewaardeerde klant. Privacyregels voor credit scoring [The valued client - credit scoring and privacy] Dutch DPA, September 2000. Backgroundstudies & Investigations 18