Know your credit worthiness (Schufa Score)

If you are staying in Germany you might be very well aware that most of the services here are governed by signed fixed term contracts. It could be anything right from a Gym enrolment  to Library subscription or an Internet or a telephone connection. There exist multitude of such contracts varying in duration from 3 months to 6 months upto a year or so.

As a result one has to be very careful whilst getting into any of such contracts without knowing or rather being aware of right termination rules. Any wrong step of non-fulfilment of obligation may result unwanted attention causing a dent into your credit worthiness.

Typically companies or I should say service providers should be aware of the risk factors towards default associated with their prospective clients. In order to align this understanding countries over the years have developed various mechanisms.

The real SCHUFA

In Germany SCHUFA (stands for German: Schutzgemeinschaft für allgemeine Kreditsicherung; English: Protection company for general creditworthiness) Holding AG is the private company  or authority which does the job of recording and calculating the credit statistics or simply credit worthiness of the citizens. It not only protect its clients from credit risks but also offers protection from insolvency to borrowers.

How does it work

The company will track all bills or fines you might have left unpaid and put in your credit record history. That’s why when people say “schufa” , they often mean the record held by the company. Your record will be check by companies when opening a phone account or by your bank when you apply for a credit. They will then be able to tell if you have debts or not and if you can be trusted as a customer. The company is basically rating your ability to pay your bills. This record (called Schufa Auskunft) will follow you everywhere as consumer in your everyday life, you‘d better keep it clean !

As a foreigner, it will be automatically created when you have completed your anmeldung and subscribed to a first contract like for a mobile phone for example. The cleanest schufa score you get at the beginning is rated at 1000 points. 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 annoying. However, this system is preventing that you become overwhelmed by debts overtime.

As per the Wikipedia, Schufa has 479 million records on 66.2 million natural persons, amounting to about three-quarters of the German population. Schufa processes more than 102.9 million credit checks each year. Of those, 1.5 million are self-checks by citizens. Schufa employs 752 people (as of 2010). In 2009 it took in 1.9 million Euros (about $2.5 million USD) in revenue from ordinary activities and a total of nearly 108 million Euros (about $150 million USD).

Caveats

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.

Understood, but how do I get my credit report (may be for free) ?

So the point is this is something one can’t ignore in order to be credit sane in the views of potential service providers.  But then how should one know where does I stand in terms of my credit rating ? The answer is simple, get a report on your credit worthiness. How many of you know that since 2010 regulation SCHUFA is obligated to provide on free report per year. Any subsequent reports are based on again “subscription model” (pun intended). 

There is a main website which informs you what SCHUFA is all about and further the sister website MeinSchufa provides to access to various applications for obtaining the requisite report.

Now when you visit the MeinSchufa you are presented with various monthly options to subscribe. But if your are one time visitor and may be don’t need reports more than once a year, you need to look for the application for free report. Schufa has been quite clever in presenting this in a stealthy manner. You don’t right away see the link for the same. However you need to navigate to,

Main Page -> Auskuenfte -> Datenübersicht nach § 34 BDSG

Basically since 2010 there is law (Bundesdatenschutzgesetz) to allow one free report per year. And the SCHUFA has put this in a convoluted manner. Just click the link and you will be presented with a page asking to choose language (between German, English and Turkish). Once you select the same, you land into PDF which has to be downloaded and filled appropriately to be sent together with your passport and visa card. If you don’t want to go ahead with subscription don’t check or sign the Alternative section/box. Finally post everything to SCHUFA Holding AG Postfach 10 25 66 44725 Bochum as mentioned.

If all documents and form are alright, you should be getting the report within a fortnight !!

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