Everything You Need to Know About Schufa: Credit Scores, Reports, and How to Improve Your Rating in Germany

Are you a newcomer to Germany? You may have heard the word “Schufa” and are now looking to understand what it means. For newcomers, Schufa can be a bit confusing because they may not have encountered it before. For example, when searching for a rental property in Germany, the landlord often asks for documents including a Schufa. So, it is important to obtain a Schufa. In this article, we delve into the details about Schufa.

Schufa is a German term you may hear after arriving in Germany. In simple terms, it refers to your credit score. To put it more simply, Schufa is a credit score that represents your ability to pay bills on time. You might wonder how these scores are calculated. Well, they are based on your previous history of paying utility bills, mobile phone bills, bank payments, credit card payments, and so on. Here’s an example: if you have unpaid bills or credit card debts, your Schufa score will be much lower. Conversely, if you have no outstanding bills and pay everything on time, your Schufa score will be much higher. In Germany, landlords often check Schufa credit scores before renting their property to assess trustworthiness. A company named SCHUFA Holding AG maintains and checks all Schufa-related information in Germany.

What is the purpose of a Schufa document?

If you are permanently residing in Germany, you must have a Schufa document. This document is very important for your day-to-day life in Germany. Every financial step you take in Germany will likely require you to provide your Schufa document. If you need to rent a house, you’ll need a Schufa document. If you need a loan, you’ll definitely need a Schufa. If you need an internet provider to connect Wi-Fi in your home, you’ll need a Schufa document. In short, for every financial step, this document is essential.

A Schufa score above 97 percent is considered very good. If you pay your bills on time, you will have a strong credit score. If your Schufa score is above 97.5%, you have the lowest credit risk. The lower the percentage, the higher the credit risk. So, aim to keep your Schufa score above 95% at the very least.

You can obtain a free Schufa report once a year. German law states that every resident has the right to access their credit score. You can also request a free Schufa report by submitting your essential documents and filling out the form on the Schufa website. After making the request, you will receive your Schufa report within a few days.

To maintain financial reliability in Germany, you need a good Schufa credit score. I advise you to pay all due bills, close all unnecessary accounts, and cancel credit cards you don’t need. Avoid going too deep into overdraft on your current account. By being punctual in these financial matters, you will surely achieve a good Schufa score.

Schufa is very important in day-to-day life in Germany. It has a significant impact. As you already know, Schufa provides credit information to various companies in Germany, which is crucial if you want to use their services. Whether you need to take out a loan from a bank, obtain service from Deutsche Telekom, or rent a house, Schufa is essential for checking your creditworthiness and ensuring you have the ability to pay on time. Without a Schufa credit score, you may be unable to access these necessary services.

If you are a newcomer or expat, you might not have a Schufa check yet, but you still need housing. So, what can you do? Well, there are some ways to rent a home without a Schufa credit check. First, you can rent a furnished flat from companies like Housing Anywhere, which provides housing without requiring a Schufa credit check. Another option is to share a flat with other people. Lastly, you can try to find landlords who will rent their property without a credit check. Many landlords in Germany won’t ask for a Schufa check from newcomers; you only need to show your recent bank statement or deposit to rent a house from these landlords.