Influence of the GDPR on the consumer’s credit market

Pursuant to the bill on amending certain acts in connection with ensuring the application of Regulation 2016/679 (i.e. the act introducing the GDPR), a closed catalog of personal data, processed by entities providing consumer credit as part of automated creditworthiness assessment and risk analysis, is to be implemented. Moreover, an automated decision-making process is going to be allowed only if the person applying for loan is guaranteed with the right to receive relevant explanations as to the basis of the reached decision, to challenge the decision, to express his own position and to obtain human intervention.

On one hand, this change may hit highly technologically advanced loan institutions that use scoring mechanisms to grant loans of low value – because after changes, the data catalogue used as algorithm variables will narrow down, which may result in lower quality of credit decisions or increasing the percentage of refusals. On the other hand the changes may as well affect the situation of the consumers themselves, who will probably find it more difficult to get a loan.