Financial products are undoubtedly some of the most important means to improve the quality of life, since they allow people and companies to achieve both short and long term goals. That is why at Blackcatcard we decided to make access to our services, such as opening an account and receiving a payment card, increasingly universal and simple, as a contribution to improving financial inclusion at a regional and global level. One of the methods we use to meet this important objective is the elimination of credit score check as a requirement for access to our financial products.
What is a credit score?
The credit score is an indicator that predicts the behavior of a client in relation to the use of credit product. It is based on the credit reports that different companies make on that client. The score gives information about the possibility of that client paying a loan on time or falling behind with his obligations. Based on this indicator, credit companies decide whether or not to grant a loan to a client (from a mortgage to a simple Payday loan). Under this logic, many banks in Europe ask their clients for their credit score also to allow them access to other products, such as bank accounts, credit or debit cards. On the other hand, the credit score is important for other types of products and services, for example to buy a smartphone on installment payments, request cell phone plans or Internet, rent an apartment, among others.
In some countries there are government entities dedicated to receiving credit reports and consolidating information on debtors. In parallel, there are private companies with the same objective, which regularly offer the most reliable credit score on individuals and legal entities in the market for other companies.
At first glance it seems a very useful and indispensable tool, but this is so only from the point of view of the companies that offer financial products. In many countries, including developed countries and important economic centres, requiring this credit score is an insurmountable obstacle for many people who do not have it for one reason or another. In this scenario, even in developed countries, a basic service, such as opening an account, is a real challenge for many people. This is the case of Germany and the Schufa report requirement.
What is the Schufa?
In Germany – Europe's economic centre, where workers, entrepreneurs, students and migrants from all over the world converge – not everyone can have a bank account in a traditional bank, as it requires complex procedures and many documents. One of the biggest drawbacks is the famous Schufa. This is a report that certifies that a person has no debts and is a good (or bad) payer. This document is required for practically everything, for example renting an apartment, requesting a telephone service or, relative to our topic, opening a bank account. To obtain it you need to apply online, but the Schufa is sent to a physical address in Germany by post. Many banks still require Schufa.
When you need Schufa to access financial services, you may face several scenarios, among them:
- You have all the documents in order, and you will have to make the application, assume some costs and wait for a while before you can open your account. If you have a good credit history you will be able to open your bank account.
- You receive your Schufa, but you have a bad score, which will make it more difficult for you to open an account.
- You don't have the necessary documents. In this case we run into a paradox. If you are a newcomer to Germany, you may not have rented an apartment. If you do not have an address of your own, you will not be able to apply for the Schufa. And if you do not have a Schufa, you cannot rent an apartment. You will not be able to open a bank account either, which will complicate your stay in the country.
On the other hand, language is a barrier. Although Germany is an important economic destination for many, not everyone knows the language. Not knowing German also poses a challenge for both the most experienced entrepreneurs and migrants looking to open an account as an individual client, making it even more difficult to access financial services.
There are similar cases in other European countries. In Spain, a country that also attracts many foreigners from all over the world, we find a similar situation. Many migrants face obstacles when they try to open an account in a traditional bank. There are cases of people with work permits and all the necessary documentation in order, but who are rejected in this banking system for any "difficulty", for example not having a valid contract, even if they have a work permit. Of course, they cannot sign contracts because they do not have an account, that is, a new paradox.
Why do we offer online banking without requiring a credit score?
Although there is a generalized commitment to improve access to financial products, the truth is that not all market players have the willingness, infrastructure or capacity to achieve the proposed goals. For example, many traditional banks, which for a long time were the benchmarks and synonyms of financial services, today do not have the most appropriate technological development to bring their products to a virtual world to offer them to the general public. In fact, banks maintain bureaucracy and rigid structures, typical of their traditional nature, which implies long, costly and often unnecessary processes. With these characteristics, their services are to some extent exclusive, i.e., not everyone can access them.
We, as neobank, have provided an answer to these paradoxes and other inconveniences. Therefore we offer our individual clients the possibility to open their own IBAN account without a credit score check regardless of the jurisdiction from which the application is made. In addition, as we operate 100% online, for all individuals a valid passport and Internet access is enough to access our online banking and open an IBAN account totally free of charge. Although we were initially set up as a service for residents of the European Union, clients from all regions of the world can enjoy our financial products, as the only indispensable requirement is the Internet.
The way we operate allows us to better adapt to the needs of people who have historically been outside the traditional financial system. In other words, we, as a new financial technology institution, are better adapted to the principles of financial inclusion and meet the objectives that have been proposed in this regard with greater ease and better results.
People historically excluded by the traditional banking system, as well as entrepreneurs and individuals with a high standard of living, find in our neobank financial services that fit their needs perfectly and at fair and affordable costs. Anyone with Internet access can use our services. Our Blackcatcard platform is very intuitive, which makes it easy for our clients to understand how our products work.
Our commitment to our clients and society in general is to expand our online banking, for a global financial inclusion, using all our resources to make our financial products better and more affordable, with competitive prices.
FAQ:
Does Blackcatcard check my credit score to open an account?
No. In order to improve access to our service, we offer our clients to open an account without checking their credit score.
What documents do I need to open an account?
At Blackcatcard all you need is a valid passport. In traditional banking you will be asked for many more documents.
