What exactly is SCHUFA, and how does it affect your credit rating in Germany?

SCHUFA is a credit report that is somewhat intrusive.

SCHUFA Holding AG is a corporation that acts as a clearinghouse for information about you (as a customer) gathered from utilities, banks, internet providers, and other sources. The firm will keep track of all bills and fines throughout time. They build and record a credit rating score for every German residents using this raw data and parsing it though their own algorithm. That’s why when people say “SCHUFA,” they’re referring to the company’s record.

The firm is essentially assessing your ability to pay your bills. You should keep this record (called SCHUFA Auskunft) clean because it will follow you everywhere as a consumer in your daily life. Otherwise, there could be terrible consequences, but there are also options available to get credit without SCHUFA

Its ramifications in everyday life

Almost every key stage in your new life in Germany will be influenced by your SCHUFA record. When you open a phone line with Deutsche Telekom or apply for a loan with your bank, your record will be examined. They’ll be able to identify if you have any debts and if you can be trusted as a customer after that.

Most importantly for newbies, landlords will want to check your SCHUFA score before signing your lease. This can be difficult because beginners sometimes lack a SCHUFA score to begin with! Therefore, we generally choose for flat shares, sublets, or short-term housing initially.

What is SCHUFA? It’s a simple approach to keep your bills under control.

In principle, the best SCHUFA score (called “Basisscore”) you earn at the start is scored at 100 percent. If you don’t pay your debts, your score will drop in proportion to how bad you’ve been. If it does, it may limit your capacity to take on additional contracts, which can be inconvenient. This strategy, on the other hand, keeps you from becoming overwhelmed by obligations over time. Even if you pay off all of your debts, your credit score will drop a few points for some reason. It’s perfectly OK to have a score of 95 percent, for example.

Here are the several “Basisscore” tiers and what they mean to offer you some context. It determines how likely you are to pay your bills, credit cards, contracts, and other obligations.

Please keep in mind that 100 percent is impossible to get, with 97.5% being the highest attainable result. The abrupt risk of mortality, which none of us can truly prevent, is accounted for by those few percent’s.

You see, it’s not all horrible. “Schutzorganisation für Allgemeine Kreditsicherung” is what Schufa stands for, which roughly translates to “Organisation f         or broad credit safety protection.”

What is the best way to receive a free SCHUFA record?

As stipulated by law (34 Bundesdatenschutzgesetz (BDSG)), any German resident has the legal right to review the data contained in their SCHUFA score. As a result, you are entitled to at least one free copy every year. SCHUFA refers to it as “Datenübersicht” or “Datenkopie.” This free record contains all of the information that landlords require.

How to receive a free SCHUFA record is as follows:

  • This page can be found on the SCHUFA website.
  • Look for “Datenkopie (nach Art. 15 DS-GVO)”” in the right column, from the drop-down menu, pick “Jetzt bestellen”
  • The following screen has numerous fields for you to fill up with your personal information. Fill in the blanks. A copy of your ID card, passport, and Meldebescheinigung can also be uploaded (residence registration certificate).
  • After you submit a request, you will receive a paper copy in the mail within a few days.