CREDIT SCORE 

For many people, the first thing they think about when moving to Germany is probably not the credit system. But maybe it should be. Delving into the intricacies of this system proves to be crucial. Whether you're planning to sign a mobile phone contract, or even obtain electricity for your new place, having a good credit score, commonly referred to as a SCHUFA Score, becomes indispensable.

Veröffentlicht am: 28.01.2025

Credit Score

The importance of the score becomes even more evident when navigating the German rental market. Renting a flat often requires presenting a comprehensive report to potential landlords, who utilize this information to determine the reliability of prospective tenants. A positive credit score can significantly improve your chances of securing a desirable rental property, while a negative score might result in difficulties or even rejections.

But what exactly is the SCHUFA Score and why does it hold such significance?

A quick overview: 

The German credit record system is primarily represented by SCHUFA Holding AG, along with three other major institutions: Creditreform Boniversum, CRIF, and Informa Solutions (aka Arvato/ Infoscore/ Experian).

These institutions gather information about individuals' payment habits from various sources, including banks, internet providers, and suppliers.

The collected data is processed through proprietary algorithms to generate credit scores for every adult in Germany.

The credit record reflects individuals' ability to pay bills, including the number of bills and the timeliness of payments.

A clean and positive credit record, similar to credit scores in other countries, is essential for easier navigation of financial services and opportunities in Germany.

Landlords, employers, and other entities often request access to an individual's credit record to assess their financial reliability.

Regularly reviewing one's credit record and addressing any inaccuracies or errors is crucial for maintaining a healthy financial reputation.

A positive credit record enhances the chances of obtaining favourable loan and credit card terms, securing housing, and accessing other opportunities.

Individuals have the right to access their own credit records and can dispute any inaccuracies or errors they find.

Proactively managing one's credit record contributes to financial well-being and opens up more opportunities in Germany.

 1. What is a (Schufa) Credit Score? 

The most known German credit record institution is called the SCHUFA Holding AG. This stands for “Schutzorganisation für Allgemeine Kreditsicherung” which roughly translates to “Organisation for general credit safety and protection”. But there are four in general. The three others are Creditreform Boniversum, SCHUFA, Arvato Infoscore/Experian, CRIF. They all work in similar ways: They source details about your payment habits from banks, internet providers, utility suppliers and many more. Basically they will track your bills but also any fines that you might have amassed. They then pass this data through an algorithm of their own, and that’s how everyone living in Germany gets a score. Or every adult, I should say, as children don’t generally sign their own contracts and so on. When people talk to you about SCHUFA, they are most certainly talking about your record, not necessarily the company itself. 

In a nutshell, the company rates your ability to pay bills. How many there are, and specifically whether or not you pay on time. Like credit score in other countries, your Schufa record is very important, so the cleaner it is, the easier you will get through life here. 

 2. What data is collected?

Almost every company in the country provides these credit score companies with information, as there are more than 10,000 cooperating partners in literally every industry. These two entities function together in a sort of symbiotic exchange: The credit scoring organisations give the companies intel on the customer and are, in turn, provided with payment records that the companies have collected.

There are also some data points that credit institutes are not allowed to keep on file. Here is a quick overview of what they may and what they may not keep about you. 

Data that IS collected

Data that is NOT collected

Data that IS collected

Name

Data that is NOT collected

Wealth

Data that IS collected

Date of birth

Data that is NOT collected

Capital

Data that IS collected

Address

Data that is NOT collected

Corporate investments

Data that IS collected

Information about Credit cards, Loans, and other financial information

Data that is NOT collected

Job Title

Data that IS collected

Current mobile phone and leasing contracts

Data that is NOT collected

Employer

Data that IS collected

Guarantees

Data that is NOT collected

Religion

Data that IS collected

Accounts with mail order companies

Data that is NOT collected

Nationality

Data that IS collected

Credit obligations

Data that is NOT collected

Marital Status

Collected Data

Not all companies work with all record organisations and vice versa, so it is possible that you may have a slightly different score from credit institution to credit institution. Don’t worry about that too much, though, they should still be fairly similar. So as soon as you make a contract with a finance institute, an insurance company or shop something that you pay off in instalments, a record is automatically created.  

 3. How is it calculated and what do the values mean?

The exact calculation is a trade secret. But here’s what we have found out so far:

If SCHUFA doesn’t have any data at all for you, they will have to geoscore you.That means that they will take the data from people that are your gender, live in your area and are roughly your age to help them determine a score. Note that this is extremely rare, as it only applies to 0.3 % of all German residents and only until they get a loan or conclude some other type of contract. 

If you don’t pay your bills on time, or if you don’t pay them at all, your score will start to decrease. If this happens too much, you’ll find it harder to conclude new contracts in the future. This could honestly be a blessing though, as it prevents you from racking up loads of debt over time. It also protects businesses from customers that aren’t able to pay for their services or products, and therefore ultimately from bankruptcy. Generally your score is adjusted every three months

Note that nobody has a 100 % Schufa score. Like, ever. This value represents someone, for whom the risk of them not paying their instalment is at 0%. Logically, it is not possible to ensure that, even if someone is extremely reliable. Even if you pay everything on time, your score will go down a few percent, with the maximum score being 97,5 %. The reason for this is that everyone is technically at risk of sudden death. Even if you’re not ill you could have an accident, be killed or commit suicide. So if that should happen, then obviously you won’t be able to pay off whatever credit you may have taken out. So there's always that risk. 

However, there are also other factors that play into it. So even if you always pay everything on time, having loads of credit cards, even if you don’t use them and they aren’t indebted, is frowned upon and can make your score go down. This is because it is not deemed financially logical or beneficial to have excessive amounts of credit cards, but rather it indicates that the person may be struggling to oversee all their financial services. 

It is important to note that not every collected data point is of the same level of importance when it comes to your score. For example simply applying for a loan does not factor into your score at all. It stays in your record for exactly 12 months and will be visible for each partner for a period of 10 days, yet it does not impact your score negatively. You simply have less of a chance of getting your loan. If a partner sees that you have been unsuccessful with another partner they may not want to give you a loan either. Personal data and your address do have an impact but it is not particularly substantial. The most important information comes from your payment history, debt collection data (known as “Inkasso” in Germany) as well as any court data and other legal proceedings. The more incriminating that value is, the lower your score will be and the greater the level of risk for the creditor to give you a loan. In other words: The lower your probability of payment. What basically is the value, the score is showing!

Let’s look at some values and what they mean:

Score Value

Probability of payment

Score Class

Score Value

ab 97,22 %

Probability of payment

> 97,22 %

Score Class

Excellent

Score Value

93,54 - 97,21 %

Probability of payment

93,54 - 97,21 %

Score Class

Good

Score Value

85,89 - 93,53 %

Probability of payment

85,89 - 93,53 %

Score Class

Acceptable

Score Value

30,00 - 85,88 %

Probability of payment

30,00 - 85,88 %

Score Class

Sufficient

Score Value

up to 29,99 %

Probability of payment

< 29,99 %

Score Class

Insufficient

Level of Risk by Score Values

 Basisscore and Branchenscore

The so-called SCHUFA-“Basisscore” which roughly translates to base score is essentially meant for your eyes only. You can find it out by asking for “Selbstauskunft” which basically translates to self-disclosure. This value is in percentages and the higher the value the more credit worthy you are (like in the table above). It is recalibrated and adjusted every 3 months. You can also just get one in the bonify app. For free, of course ;)

Then there is the Branchenscore. This would very loosely translate to industry score. Basically it’s an evaluation of how clean your payment record is within a certain industry or sector. So this score is catered to a specific field, like telecommunications for example.  It is a part of your Selbstauskunft. 

The scores for each industry are calculated individually and divided into rating tiers. 

Have a look at what each tier means:

credit score branchenscore

Note that every credit agency has a different method for calculating the exact value and those methods are trade secrets. So there is not an exact formula to improve your score if you are not happy with it. I can, however, provide a little insight into how bonify does it. 

How does the bonify credit score work?

bonify uses the information provided by our partner Creditreform Boniversum and the information that you entered in your profile and derives a score from that. Note that the amount of money you earn, your exact profession and any money you may have saved up does not affect your score. 

These are some things that do affect it: 

Personal information such as name, birthday, gender and address

Payment history, particularly negative behaviour but also positive things, like if you managed to pay off a credit in time

Debt collection data (called “Inkasso”), which happens if you don’t pay after 2 written warnings

Court data, like if there are warrants out for your arrest and if you have any affidavits. 

Insolvency proceedings

Existing credit obligations

As you can see, your loan and who your employer is, as well as your marital status and your religious background play no part in the score. 

However, if you are applying for a flat, data about your workplace, how much you earn and your marital status will be collected separately and therefore still play a role. In fact, you will probably have to provide that data yourself. 

So what does which bonify score mean? 

Basically the same rules apply and the higher the score, the better. 

 4. How long does each information entry stay on record?

Negative records can impact your score for years, even after you have resolved the issue and paid off any potential debt. Let’s look at how long exactly.

Information Entry

How long it is on the Record

Information Entry

Entries about credits or loans 

How long it is on the Record

3 years after paying it back

Information Entry

Credit / loan requests

How long it is on the Record

12 months after request

Information Entry

Entries about you current bank accounts and credits cards

How long it is on the Record

Dissapears when you close the account

Deletion periods

Note that any negative information can be kept as an “FYI side note” for up to six years. So it can really affect how easy your life in Germany is going to be from here on out. 

 5. How does my credit score impact my day to day life? 

As you can probably deduce from the paragraph above, your credit score is extremely important and can greatly impact any finance-related purchases and contracts. For example, your record will get checked when you get a mobile phone contract, which we all need in this day and age. But also if you need a loan from the bank or you want to rent your flat, you will definitely profit from a good credit score. The company that you are trying to do business with will be able to see if you have debts and hence if they can trust you as a customer and with their product. 

Because of this, it can be difficult for a new arrival in Germany to find a flat of their own and so many opt to live with a friend or in a flatshare first. Another opportunity would be to sublet, as some tenants don’t necessarily need you to hand over a credit score report. Once settled in, you can make a mobile phone contract or something and your record will be created.

Your score can also impact your life in less dramatic ways. For example you may not be able to get the most inclusive mobile phone contract with the newest iPhone. If your credit score is not good or non-existent a lot of the time you will only be able to conclude a smaller contract or you might have to resort to prepaid for the time being. 

 6. How do I order my credit record?

If you’re looking to order your record, then I’m happy to inform you that you are in just the right place! Just register here and find out! 

As a German resident you also have the legal right to review any and every data point collected about you under (§ 34 Bundesdatenschutzgesetz). That means you are allowed one free copy a year. This is generally referred to as the Datenübersicht oder Datenkopie, meaning data overview. This will contain all the necessary information for possible landlords or other big companies. 

If you want to get one, then you should follow these steps: 

Go to this page

Find the “ Datenkopie (nach Art 15 Ds-GVO)” and click “ Jetzt bestellen”, meaning order now. 

Enter your personal information in the next screen, including a copy of your ID, passport and Meldenbescheinigung (residence registration certificate) 

You will then get your copy a couple of days later via mail. Voilà :)

But what if I want it faster? 

If you are in a bit of a hurry, you can also just buy it for 29,99 €. This would mean you have to order a BonitätsAuskunft directly from Schufa’s website here. 

Click on “Jetzt bestellen”

Fill in the payment method and information

The record will be ready for immediate download. But you can also go to a Postbank branch and have them print it for you, for the same price. 

 7. How can I improve my credit score?

Unfortunately there is no exact formula to improve your credit score because the exact method used to calculate is a trade secret. But there are still somethings that will help you improve your score, I just can’t tell you precisely when it will improve and by how much exactly. 

Pay on time

Cancel unused checking accounts and credit cards

Makes sure all the entries that you do have are correct

Have entries that are not right corrected or deleted

Always make all your instalment payments on time

Make sure your spendings don’t outweigh your income

Try not to use your overdraft facility

Ideally save some of your income

If you are having financial issues, communicate with the creditor and try to find a solution. Generally they are not trying to cause you any issues, they just want their money. I mean, don’t we all ;) Always check your score and stay on top of things. 

 8. How can I check and monitor my credit?

According to recital 63 of the GDPR, or DSGVO in German, every consumer in Germany has the right to a Selbstauskunft, which roughly translates to self-disclosure, several times a year for free. To get one from Schufa you would have to contact them in written form and provide evidence of your identity. But it can take several days or weeks to arrive. You are also only allowed this service in “reasonable intervals” so don’t try and order one bi-weekly. And quite frankly there would be no point in doing that because your score would still be the same half a week later, because it is only updated every 3 months anyway. 

bonify tends to make your life a lot easier if you want to stay on top of things. You can simply register with the bonify app and check your score all the time and for free. The registration process only takes a couple of minutes and should you see any entries that you would like to contest, you can contact our support directly. 

You can also use our finance management tool which will help you track and analyse your income and your spendings and you can enable account alerts to monitor what is happening there. We will then be able to send you personalised offers for loans, rather than you having to figure out how much would be doable all by yourself. 

 Conclusion: 

In conclusion, the German credit record system, particularly the SCHUFA Holding AG, plays a significant role in assessing individuals' creditworthiness and financial behaviour. Alongside SCHUFA, there are three other major credit record institutions in Germany, namely Creditreform Boniversum, CRIF Bürgel, and Infoscore Consumer Data. These institutions collect information from various sources such as banks, internet providers, and suppliers to track individuals' payment habits, including bills and fines.

When people refer to SCHUFA, they are typically referring to an individual's credit record rather than the company itself. This credit record reflects an individual's ability to pay bills, including the number of bills and the timeliness of payments. Similar to credit scores in other countries, a clean and positive Schufa record is crucial for navigating life in Germany more easily.

However, it is important to note that you have the right to access your own credit records and can dispute any inaccuracies or errors they may find. Regularly reviewing your credit record and addressing any discrepancies is crucial for maintaining a healthy financial reputation. So just make sure you check your record regularly and stay on top of things. 

The German credit record system, particularly the SCHUFA Holding AG, acts as an important tool for evaluating individuals' creditworthiness and financial behaviour. Understanding the significance of maintaining a positive credit record and proactively managing it can greatly contribute to your financial well-being and opportunities in Germany.

Having a poor or nonexistent credit score can also impact your everyday life greatly. For instance, you may be limited in accessing the most comprehensive mobile phone contracts or obtaining the latest iPhone. In such cases, you may be restricted to smaller contracts or have to opt for prepaid options temporarily.

Overall, understanding the significance of a good credit score in Germany is crucial for navigating various financial aspects of life. Building a positive credit record opens up opportunities for better contracts, loans, and housing options. It is important to be mindful of your credit score and take steps to improve it over time. If you have any questions regarding your bonify credit score, please don’t hesitate to contact our support. We are more than happy to help :) 

 FAQ

Credit rating institutions in Germany work with tens of thousands of companies in the country. These could be banks, insurance companies, energy suppliers, leasing and also mobile phone companies. As soon as you get a contract with one of these, a Schufa profile is made about you and your data will be collected from there on out.  So pretty much any grown up that lives in Germany permanently will have a credit score record. 

Ahhhhh, yes, one of the many faults of German bureaucracy. Your landlord will ask for a Schufa record, but you don’t have one because you don’t have a bank account or an “Anmeldung” (residence registration certificate) yet, because you don’t have a place. 

Honestly the quickest way to bypass this situation is to go for a flatshare or try to sublet an apartment or a room. That way it’s upto the owner or the main tenant to make the decision. You can then go register, open a bank account and find your own home. There is also Wunderflats, who rent out furnished places without a credit record, so you might want to check that out :)

You’ll be happy to hear that it doesn’t impact your score at all, at least not if you are still making all your payments on time. If you don’t have any instalments left to pay and you don’t max out our credit card or something like that as a result of being unemployed then your score will not change at all :) 

Nope, sadly (or in some cases luckily) you start with a fresh slate once you become a resident here in Germany. 

There is no quick solution or easy fix for a negative entry, if it’s not a mistake on their part, you cannot just have it removed. The one thing you can do is try and resolve the issue with the creditor as swiftly as possible and make sure that it doesn’t happen again. Learn from your mistakes, essentially. Try and pay all your bills in time and avoid using your overdraft possibility, if feasible. 

Credit companies will store information about you for a very very long time. Long after you have left Germany and at a European level too. I can’t recommend you just leave unpaid bills here if you are planning on coming back at some point. Well, I mean you probably shouldn’t do that in general, actually, but even less if you want to return and have an easy life. That kind of thing nearly always backfires anyway. 

Veröffentlicht am: 28.01.2025