👻Europe's Financial Ghosts!

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Hey VentureTaler - It’s Alex!

Welcome back! Today we are diving into our 20th VentureTale. If you only have 4 minutes and 41 seconds to read, I got you covered!

A credit card, car loan, business loan or mortgage; once we become adults sooner or later the need for extra cash arises. And while loan sharking is easy (and illegal!) and we don't all have a family with some extra pennies floating around; the bank has become the go-to solution in today's age. As we all know, banks haven't become big and powerful because they are careless and ignorant. They grew because the make smart (for themselves) decisions based on cold, raw data. And this is where we all become a profile with the primary parameter set to "credit score".

If I’d ask you now what your credit score is (as a European resident), you’d probably scratch your head in confusion. Let’s see why..

The Industry

While Americans enjoy a beautifully unified credit system (thanks, FICO!), Europeans are stuck in a fragmented nightmare that makes zero sense in 2025. The U.S. credit reporting market is an $18.63 billion industry projected to hit $24.81 billion by 2030, with FICO scores used in 90% of mortgage decisions.

Europe? Well, that's a different story.🤦‍♂️

European credit reporting generated €19.6 billion in revenue in 2024, but this includes debt collection services as well, covering 27 different national markets, each with its own rules & regulations. It's like having 27 different languages for saying "Can I borrow some money?"💸

The main difference is that Europe takes into account only the filed financial data and limits automated reporting of payment history. The European Court of Justice recently threw another wrench into the works with the SCHUFA case, challenging automated credit assessments under GDPR Article 22. This ruling could force member states to adopt even more distant approaches, making the separation worse!

The funny thing is that Europe actually leads in open banking implementation through PSD2 regulations, which could theoretically provide richer data for credit decisions. Research shows open banking data sharing can increase loan approval rates by 9%. But has this translated into a unified credit scoring system? Of course not!🙄

The result? A continent where moving from Italy to Hungary means your excellent credit history becomes worthless paper, and cross-border lending feels like navigating a bureaucratic maze designed by someone who hated efficiency.