A strong financial history in Germany means that you receive a regular income from your employer, and you have a good credit history. Your credit history is proven by your schufa score.
Your score is actually used for a number of different applications like phone contracts, electricity providers, and even insurance plans. If you don’t have a good score, it could put you in a bad position later when you’re looking to take on new financial obligations or change your current ones.
What is a schufa?
You probably are already aware of how important your schufa is since it’s required for a phone contract, apartment, and other recurring payments that you’ve already signed up for. You can even be denied private insurance if your score is too low since insurance plans also fall under the category of continual financial obligation.
Schufa is short for Schutzgemeinschaft für allgemeine Kreditsicherung in German. It translates roughly to the Protection Association for General Credit Guarantees. So, it’s an organization that looks at data from banks to assess your credit score along with the risk for potential missed payments.
How to read a schufa score
You’ll receive a score out of 100% with 100% being a perfect Schufa score and 0% being the worst. In most cases, anything over 95% will allow you to open any accounts you need.
|>97.5%||Little to no risk|
|95% – 97.5%||Minimal risk to manageable risk|
|90% – 95%||Satisfactory to increased risk|
|80% – 90%||Significantly high to high risk|
|50% – 80%||Very high risk|
|<50%||Critically high risk|
Because of how important the Schufa is, every person is entitled to one free Schufa per year. Although there is a relatively small number of mistakes for the Schufa, if you do see one, you have the right to request it be deleted.
Data for your schufa is also deleted once every three years if the sum is not more than €2,000 and has been paid within 6 weeks of receiving the debt. For children, their negative schufa entries are deleted once the debt is paid.
What data is collected to create your schufa
Along with personal information like your passport, ID, and proof of registration (or, Anmeldung), the schufa will collect information about you through the following channels:
- Bank and credit card accounts
- Active loans
- Phone contracts
- Leasing contracts
- Installment payments
- Third party payment guarantees (Bürgschaften)
- Missed payments
How to improve your schufa score
One way to improve your score is to request one online and look through each of the entries to see if they are incorrect. Although schufa is relatively accurate, there are some instances where incorrect information has been entered which you have the legal right to correct.
There are lawyers who specialize in schufa information who can help you fight false or misleading information on your score.
You should also pay off any existing debts on your schufa. While the opposite might be true for other countries where payment is recognition of the debt, in Germany, the payment will register that entry as “completed,” so after three years (calendar’s end), the entry will be deleted from your profile.
Two other ways to get a better schufa is to close any bank or credit card accounts that are not being used and avoid frequently moving to new places.
Your schufa score and private health insurance
For people who are new in Germany, even the smallest thing like forgetting to pay for the public transportation fine or a missed phone payment can take you from an almost perfect score to one below 50%.
Request a schufa from Mein Schufa to see where your score is and if you’re at risk of being denied health insurance. If you’re worried or have any questions, feel free to schedule an appointment with us where we can discuss your options and what you can do to improve your score:
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