Responsible credit: protection against over-indebtedness

The Swiss Association of Credit Banks and Financing Institutions (ASBCEF) considers that the central point for the granting of responsible credit concerns the borrower’s borrowing capacity. What concrete measures have been adopted to avoid over-indebtedness of loan takers?


Legal framework for responsible credit in Switzerland

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In Switzerland it is the LCC (law on consumer credit) which regulates the allocation of private loans. In particular, it requires the financial institution to verify the borrower’s borrowing capacity. The Swiss association of credit banks and financing establishments also considers this point to be central to validating a consumer’s loan request.


Credit database

Credit database

The ZEK, credit information center, gathers all the data related to private loans in Switzerland: requests, refusals, solvency, loans in progress, etc. This center then also actively participates in the fight against over-indebtedness since it records all information about private loans. In particular, it establishes codes according to the difficulties encountered when paying a loan.

This then indicates to financial institutions if the consumer is able to assume the costs associated with a credit. The ZEK then takes part in the establishment of responsible credits since it lists the private individuals unable to assume an additional loan. It then supports the funding organizations in granting responsible loans.


Borrowers: take action against over-indebtedness

debt loan

The borrower should be fully aware that during the term of a private loan, events such as a divorce or the loss of his job, can cause an unfavorable change in his income and expenses. The ASBCEF then suggests a few recommendations in order to personally protect against over-indebtedness, here are some:

  • Precise monthly budget: forecast regular expenses (rent, insurance, telephones, etc.) and irregular expenses (taxes, annual insurance premium, etc.)
  • Personal reserves: build up reserves to cope with unforeseen events (accident, rent increase, etc.)
  • No compulsive buying: do not buy without prior thought to avoid wasting your money

All these measures make it possible to manage your monthly budget in a healthy way. They point out that it is not only the financial organizations which are responsible for establishing responsible loans but also the loan applicants. It is up to everyone to protect themselves against over-indebtedness by planning their current expenses as accurately as possible and including the creation of savings to counter the vagaries of life.


Find responsible credit

money loan

In order to conclude a responsible credit that does not jeopardize your financial situation and prevents you from over-indebtedness, we recommend that you call on a credit professional such as our Agree bank partner who can provide you with information.