There are essentially two associations in Switzerland whose purpose is to collect the data of each consumer taking a loan. This collection is automatic, and mandatory in the context of the law on consumer credit. When an individual applies for credit with a bank, the bank can then check the applicant’s data with these associations.
- The IKO , or association for the management of a consumer credit information center , is the Swiss intelligence center prescribed by law. IKO records data from credit and leasing companies of natural persons. Each credit, credit card or leasing subscribed by an individual is registered in the IKO.
- The ZEK , or association for the management of a credit information center , is relatively similar to IKO. The main difference is that the ZEK collects information broader than what is strictly prescribed by law. In addition, the ZEK also applies other retention periods. Each entry to the ZEK is recorded as a code: it is called code ZEK , each code corresponding to a type of entry (late payment, loss on business, fraud, etc.). Multicredit offers information on ZEK and ZEK codes for more information.
Swiss legislation is relatively strict in terms of consumer lending. We propose in this lexicon of the credit an explanation on the two principal laws which enter in matter:
- The LCC , or law on consumer credit . This is the law that defines the duties and obligations between lenders (banks for example) and lessees (consumers). The LCC also covers private leasing and credit card granting cases. The law is available on the official admin.ch website .
- The LCD , or law on unfair competition . In particular, the LCD includes several articles and items related to advertising on consumer credit. This law is also available on the admin.ch website .
Finally, we offer in our credit lexicon some explanations on the main terms used in a personal loan agreement, or more generally related to consumer credit:
- Depreciation : The monthly cost of a credit is divided between the interest paid and the amortization of the loan. The latter simply represents the repayment of the loan.
- The budget surplus : reflects the theoretical monthly amount available once the cost of living is paid. This is calculated from the net salary, which is subtracted from the various costs (rent, insurance, food, etc.).
- The financial history , which sometimes justifies a refusal during a request, represents the antecedents of an individual. A bad code with the ZEK or late payments in the past with the mandated bank are examples of bad financial history.
- The yellow identification is a document certifying that the possessor of an identity document is the person appearing on the said documents. This is a security to avoid for example contracting a credit by usurping the identity of another person. The yellow identification can be done at any post office in Switzerland.
- Interest : reflects the cost of credit. This is an overall effective rate, and the calculation of interest is not always obvious (it is recommended to use a credit calculator ). In Switzerland, it is capped at 10% maximum since mid-2016.
- Solvency : represents the ability of the lessee to repay a loan.