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The Central Office for Credit Information (ZEK) is an organization that brings together service providers in the loan, lease and credit card industry. Its aim is to enable these service providers to exchange information with each other. The Information Centre for Consumer Credit (IKO), on the other hand, records the data of loans and leases pertaining to private individuals in accordance with the Consumer Credit Act. Comparis explains what this means in practice for your loan or lease application.
Role of the ZEK
In Switzerland, the Central Office for Credit Information (ZEK) functions as a central reporting agency for information relating to the credit history of loan applicants. Founded in 1968, the ZEK is a private organization. Nowadays, it performs the following tasks:
Legitimate Swiss lenders are members of the ZEK. Their membership obliges them to supply information to the ZEK. For every loan or lease application they receive, they consult the data stored at the ZEK.
This is therefore a key step in the process for checking the creditworthiness of each applicant (credit check). Lenders also send reports to the ZEK during the term of a loan agreement. The ZEK therefore helps lenders assess the credit risk of potential borrowers as well as the affordability of a loan application based on ongoing obligations.
Good to know: ZEK data is also consulted for various other banking services such as mortgages, Lombard loans and overdrafts.
What is the difference between the ZEK and the IKO?
In 2002, following the revision of the Consumer Credit Act, a separate body was created – the Information Centre for Consumer Credit (IKO). This requires providers of loans and leases to record the loan and lease activities of private individuals.
Directly linked to the Consumer Credit Act, the IKO is designed to protect borrowers and lessees from falling into excessive debt.
At the time of the revision, the work of the ZEK already covered the main tasks of the IKO and often much more besides. It was therefore agreed by law that the IKO would cooperate with the ZEK on a voluntary basis. Since then, the databases have been managed separately. The two organizations are separate legal entities, each having its own executive board.
Differences and similarities at a glance:
|Personal data: Last name, first name, date of birth, address|
|Credit types: Last name, first name, date of birth, address|
|Rental agreements: Hire purchase, leases|
|Credit and store cards: Payment delays, credit card debt|
|Meets the requirements of the Consumer Credit Act||Meets the information requirements of the lender|
|Data on current loans, leases and credit cards only||Also includes enquiries and rejections|
|Data on consumer loans subject to the Consumer Credit Act only||Also includes data on loans and leases not subject to the Consumer Credit Act (e.g. loans over 80,000 francs and the obligations of legal entities)|
|Includes credit information relating to credit cards|
|Information from other official sources (e.g. bankruptcy, inheritance, guardianship, legal aid)|
What information is available from the ZEK?
The ZEK manages records that provide data on the following:
Records may also include the following details, depending on the type of transaction:
The information that must be supplied to the ZEK is listed in the ZEK regulations.
What are lenders obliged to report to the ZEK?
Serious delinquencies during the term of the agreement:
Good to know: The ZEK automatically informs creditors of any delinquencies relating to their current agreements.
The following events are also automatically reported to the affected members:
Note: since open credit applications are also recorded at the ZEK, lenders can see whether a customer has open credit applications and how many. Since lenders tend to view multiple applications negatively, this could reduce the chance of an application being approved.
How do ZEK entries affect a loan application?
It is important to distinguish between neutral and negative ZEK entries:
Lenders are obliged to provide a reason for rejecting an application. As this is often something other (internal guidelines, for instance) than a standard reason, code 99 – rejected without reason – is most commonly used.
Rejected credit applications will not necessarily affect your chances of being approved for a loan in the future. For example, if an application is rejected because the amount is too high, this is not considered a negative event in terms of your credit standing.
Want to find out approximately how much you could borrow?Check loan affordability
However, multiple rejected credit applications will have a negative effect on the risk assessment: if a lender notices you have received multiple rejections from other lenders, it is in their own interests to look more closely at your application. Rejections remain visible for two years.
If you decline a loan offer, this is also recorded. It is not clear exactly how declining an offer impacts your future chances of approval. However, it could potentially mean that you have created unnecessary work for a lender and are therefore less attractive as a borrower.
Is there a reason to «fear» the ZEK?
Contrary to popular opinion, the ZEK is not responsible for an application being rejected, nor does its database contain only negative records.
Much of the data is purely administrative or informative in nature, and details of positive payment behaviour are also reported to the ZEK. This is advantageous for customers: if a lender has had a good experience with a borrower, other lenders will be able to see this too.
In addition: professional and thorough checks on applicants ensure that no excessive obligations are approved and that borrowers and lessees therefore do not become over-indebted. As a result, Switzerland has a low default rate of 1-2%, which helps to keep loan deals affordable.
Is it possible to get a loan without the ZEK?
All legitimate lenders in Switzerland are members of the ZEK. Nevertheless, you can still find some less reputable websites that advertise loans without a ZEK credit check. Don't enter into any agreements via such websites as there are usually – potentially fraudulent – debt consolidation companies behind them.
Related article:How to spot shady lenders
The main credit report codes applicable during the term of the agreement
Entries indicating poor payment practices or even defaults on loans, leases and credit cards inevitably mean you will be offered less attractive rates or in many cases be rejected.
Reports relating to credit cards are also included in the risk assessment:
Can I arrange for a ZEK entry to be removed?
ZEK extract: your right to see personal information stored about you
Both the IKO and the ZEK respect your right to see the personal information they store about you. This means that you can request an extract free of charge at any time. However, this will not include the reasons for any rejected loan applications.
Approval of a loan is forbidden by law if it would lead to over-indebtedness (Art. 3 UWG).
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