The Unlikely Marriage of Credit Bureau and Loan Start-Up: Schufa’s Acquisition of Bonify

The corporate world keeps coming up with amazing combinations. It was not until December 2022, for example, that sugar breeding bull Katjes bought a whole package of toothpaste brands from Henkel, including Theramed and even the organic toothpaste Vademecum. A strange combination at first glance, since it is sweets like those from Katjes that the dentist warns about while scraping the tartar out of the patient’s tooth grooves. At second glance, the deal is logical: if you eat a lot of sweets, you will brush your teeth. First the poison, then the antidote, that’s how Katjes sweetened the group result.

According to this approach, there would be many suitable combinations, such as stomach lozenge monopolists with fat companies or anti-hangover manufacturers with one or the other vodka distributor. Or the Schufa, which wants to present a new app this Tuesday, with a company that has loans for people with a negative Schufa entry in their portfolio.

With a bad credit bureau score, there are almost only loans with horrendous interest rates

The Schufa score is a powerful tool. If it is bad, people have virtually no chance of getting a loan, they are then uncreditworthy. According to Schufa, this should protect both sides: Businesses should not be left with consumer debts. And people shouldn’t get into debt. If you still need money, you often only have one option: you have to find a credit bureau-free loan. And these are usually only available with horrendous interest rates.

At the end of 2022, the credit agency put a few million euros on the table and bought the start-up Bonify, which does exactly that: it also grants loans with bad credit bureau, advertising slogans such as “even with negative credit bureau entries” or “payment without credit bureau -Entry” decorate the website of the start-up, a little further back it says: “Here you will not simply be rejected, Schufa entries are also no problem.” In addition, the loans still have lovely names. There is, for example, the Kangaroo loan, the Swiss loan or the Ninja loan. Presumably suitable for sneaking around the Schufa, skipping it or keeping your own score as neutral as possible. In addition, the Schufa should not learn anything about some loans, which undermines the business model of always knowing how indebted people are – and when overindebted.

Otherwise, the business model is simply brilliant: First, the Schufa stamps people as “not creditworthy”, whereupon they end up at the subsidiary Bonify, where a kangaroo or ninja tells them: Pssst, you can still get a loan here. This then costs up to 15.99 percent interest per year and Schufa collects the brokerage commission through its subsidiary. Then Katjes turns green with envy.

When asked how it all fits together, the credit agency writes that they checked all of Bonify’s partners after the acquisition, only one had to be parted with. The average interest rate is eight percent, which is normal. And whether someone is creditworthy is decided by the banks alone. The Schufa score is only a small part of the data.