What is SCHUFA: all about your credit rating in Germany and how to keep it high.

Among all the hurdles I had to conquer when moving to Germany, I never thought one of the tallest ones would be a credit rating institution. Yes, the first time I heard of it, I also asked myself: what is SCHUFA? And why does it represent such a challenge for newcomers to Germany?

This post aims at answering all that, based on personal experience and additional research.

What is schufa

What is SCHUFA: a somewhat intrusive credit record

SCHUFA Holding AG is a company acting as a central place where information about you (as a consumer) is sourced from utility suppliers, banks, internet providers & more. The company will track all bills or fines over time. Using this raw data and parsing it through an algorithm of their own, they create and record a credit rating score for all German residents. That’s why people say “SCHUFA”, they mean the record held by the company.

The company is basically rating your ability to pay bills. This record (called SCHUFA Auskunft) will follow you everywhere as consumer in your everyday life, you‘d better keep it clean. Otherwise, consequences could be serious.

Its impact on everyday life

Your SCHUFA record will play a role at almost every major step of way in your new life in Germany. Your record will be checked by companies like Deutsche Telekom when opening a phone line or by your bank when you apply for a loan. They will then be able to tell if you have debts or not and if you can be trusted as a customer. Landlords will also almost always require for your credit record to be able to sign the lease.

It can also be a lot more trivial: I was not able to buy my phone as part of my mobile phone contract because my SCHUFA score was non-existent at the time.

That sounds awful, but is it really all that bad?

What is SCHUFA: an efficient way to limit your debts

The cleanest SCHUFA score (called “Basisscore” you get at the beginning is rated at 100%, in theory however. If you don’t pay your bills, this score will decrease accordingly to how much you have been naughty. If it does, it can limit your ability to undertake other contracts which can be frustrating. However, this system is preventing that you become overwhelmed by debts overtime. However, even if you pay all your debts, your score will go down a few percents for some reason. It is completely fine to have score down to 95% for example.

To give you perspective, here are the different “Basisscore” tiers and what they mean. It measure the probability with which you will honor your bills, credits, contracts, etc.

Score valueRisk assessment – Level of risk
> 97,5 %Very low
95 % – 97,5 %Low to negligible
90 % – 95 %Satisfactory to elevated
80 % – 90 %Fairly elevated
50 % – 80 %Very elevated
< 50 %Critical
Please note that it is impossible to reach 100%, 97,5% being the maximum score. Those few percents account for the sudden risk of death, which none of us can really avoid.
Dont forget to pay on time !

That’s not all bad you see ?! Schufa actually stands for : “Schutzorganisation für Allgemeine Kreditsicherung” which roughly translates to “Organisation for general credit safety protection”

FAQ

How do I order copy of my SCHUFA record?

You can order a record from the company directly on the following website. It costs only 24,95€. (click on Bonitätauskunft on the homepage) : https://www.meineschufa.de/. Some Postbank centers do offer to print one for you on the spot as well for the same fee. No need to be a Postbank customer. This report is the preferred by landlords, because it contains all the details.

However, you are entitled to a few free requests per year that you can also get from the same website here. On this page, click “Jetzt bestellen” on the right “Datenkopie (nach Art. 15 DS-GVO) column. Enter your data on the page that follows. You will be able to upload a copy of your passport (“Dokumentupload” > “Kopie des Reisepasses”) and a copy your Meldebescheinigung with it.

Help: I need a SCHUFA record to rent a flat, but I can’t get one until I’m registered somewhere.

This is typical chicken-&-egg situation for many foreigners moving to Germany: landlords ask for a SCHUFA record for you to rent their flat, but you don’t have one since you are not registered (Anmeldung) and can’t open a bank account… because you don’t have a place yet. If you are in this situation, you might want to go for a flat share (WG) and register there until you find your own place. You can also turn to services like Wunderflats, which lets you rent furnished flats without a SCHUFA record.

How do I keep a high SCHUFA score?

To keep a good SCHUFA score (above 95%), those are the few recommended things:
Don’t open too many bank accounts in different banks and limit the amount of credit cards you own.
Don’t switch bank account too often.
If possible, try to keep healthy reserve in the accounts you own.
Pay your bills on time.
Check your SCHUFA-score once a year and correct any mistakes you might see.

Does a loss of income or employment impact my score negatively?

Not at all. Your current employment situation is not relevant for your SCHUFA score. Making use of unemployment benefits is also not relevant.
However, if through that loss of income, you run into trouble paying your expenses on time, this will be reflected negatively and lower your score.

Are there any other institutions rating consumers in Germany?

As it turns out, there are several. SCHUFA remains the most important and influential one but other ones can hold data about you. That is a bit scary i know, and quite unexpected from a country so strict about data privacy. You can find out about them and request a record from each via this website for free.

I had a great credit rating back in my home country. Can I use that to improve my SCHUFA score?

It’s not possible to use foreign sources to influence your current rating unfortunately.

When is a SCHUFA record created about me exactly?

As a newcomer, it will be automatically created when you have completed your Anmeldung at the Bürgeramt, opened a bank account, and paid a few bills with an internet access provider for example.

What should I do if I get a negative entry in my SCHUFA record?

Their FAQs on the matter is not giving any magic formula unfortunately. The only thing you can do is try to resolve the cause of that negative entry as soon as possible and keep the rest of your financial related affairs in order. This mainly means paying all your bills and credits in time, and never use your overdraft possibilities if possible.
Negative records are impacting your score up to 3 years after you resolved your unpaid bills case and it can be kept as a “FYI side note” for up to 6 years overall. See a detailed table hereafter.

How often can I order a SCHUFA record?

If you go for the paid version in the form of a subscription, you have access to your data at any time. If you want to order the free version, you can request it a few times per year. There is no clear number on this, only that it should be “appropriate”. I guess 2-3 times a year is all you will need anyway.

Information entryHow long it stays in your record
Entries about credits / loans3 years after paying it back
Credit / loan requests12 months after request
Entries about your current bank accounts and credit cardsWhen closing the account
Requests from third-party companies12 months after request at the latest.
Entries about paying your bills late3 years or 4 years in case of unresolved disputes or longer sometimes.
Entries coming from the Amtsgericht concerning your possible debts3 years or sooner if debt has been declared resolved by the Amtsgericht.
Customer accounts with third-party companies3 years

2 more important things

The SCHUFA will hold information about you long after you leave Germany and at a European level too. If you plan to leave unpaid bills behind and then come back to Germany, you might have to think twice before doing it. It could become harsh back fire in the near future.

This system makes that your personal wealth, your personal property or yearly income doesn’t have any influence on your record ! You could be the richest man in the world but still have the worst record if you didn’t pay your bills. Just bear that in mind.

I hope this introduction to a very German institution cleared things up fro you. Feel free to ask questions in the comments.

Source: 1, 2, 3, 4

415 Comments

  • Reply Ardian 08/11/2020 at 02:19

    Hi, i have doubts on Germany and currently iam not living on Germany, if i came to Germany do i get in trouble with law, police or anything or just have bad records on schufa?
    And can I pay monthly my debts on schufa?
    Thank you.

    • Reply Bastien - Settle in Berlin 09/11/2020 at 11:12

      Hey Ardian. Do you mean, you have debts in Germany? The SCHUFA is not involved in paying back debts. Unless you have done a criminal offense, you won’t be in trouble with the law.

  • Reply Nicole 07/11/2020 at 00:22

    Hey Bastien,
    Thank you for all this! I have a short question: when it comes to one SCHUFA per year free of charge, are we talking about January-December kind of year or are we talking about 12 months from the request?
    For example, if i request it in November, will it be available for free in January, as part of next year, or will it be in 12 months, therefor next November?
    Thank you in advance!

    • Reply Bastien - Settle in Berlin 09/11/2020 at 11:09

      Hey Nicole. Thanks for your comment. It made me research the topic and provided me with a valuable update on this post. You can now order a copy of your record several times a year, thanks to a EU ruling. Source.

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