Judgment of the Düsseldorf Regional Court of December 21, 2023 – Case No. 8 O 55/23
A bank may terminate a loan for a significant reason. For instance, termination is possible if the repayment of the loan is at risk due to a significant deterioration in the customer’s financial situation. However, a negative SCHUFA (Credit Protection Association) report is not a significant reason that entitles a bank to terminate a loan. This was decided by the Düsseldorf Regional Court in its judgment of December 21, 2023 (Case No.: 8 O 55/23).
When granting loans, banks must not base their assessment of a customer’s creditworthiness solely on their SCHUFA score. This was determined by the Court of Justice of the European Union (CJEU) in its judgment of December 7, 2023 (Case No.: C-634/21), according to MTR Legal Attorneys at Law, which advises on banking law among other areas. The Düsseldorf Regional Court has now decided that a negative SCHUFA report is also not a reason for a bank to terminate a loan.
Negative SCHUFA report
In the underlying case, the defendant borrower took out a loan of 35,000 euros from the plaintiff bank in December 2020, which was to be repaid in 96 installments. After disbursing the loan, the bank received information from SCHUFA about a negative entry for the borrower, who was listed in rating level P with a risk quotient of 96.8%. In May 2022, the bank received another notification from SCHUFA, stating that another loan agreement with the customer had been terminated due to default in payment. The outstanding loan installment was still about 7,400 euros.
The bank used this as a reason to extraordinarily terminate the loan agreement with its customer on May 27, 2022, citing the SCHUFA notification as an important reason. The outstanding loan claim of approximately 31,000 euros was made due by June 26, 2022. When the defendant did not settle the claim, the case went to the Düsseldorf Regional Court. The court dismissed the bank’s lawsuit for payment of the outstanding claim. The bank had no significant reason to terminate the loan, ruled the Düsseldorf Regional Court.
SCHUFA entry not a significant reason for loan termination
Merely citing a negative SCHUFA entry is not sufficient as a significant reason for termination, the court emphasized. Instead, the bank was obligated to carefully examine whether the borrower’s financial situation had significantly worsened. This would have required the bank to compare the borrower’s financial situation at the time of contract conclusion and at the time of termination, and to objectively assess the economic circumstances of the individual case. The bank should not have based the termination solely on the information from SCHUFA, the court stated.
SCHUFA information not admissible in court
Furthermore, the SCHUFA report presented was not admissible in court. This is because score values, rating levels, and risk quotients are opaque to external third parties, as it is not clear how and on what basis they were calculated, further clarified the Düsseldorf Regional Court.
Thus, the termination of the loan agreement is invalid, and the borrower can repay the loan in the agreed installments.
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