Schufa entry
The Schutzgemeinschaft für allgemeine Kreditsicherung, abbreviated Schufa Holding AG, is the most important credit reporting agency in Germany. Although other credit agencies still exist, Schufa is one of the oldest and at the same time the most relevant.
Without its permission to obtain the Schufa entry or the Schufa score values, private individuals cannot open a bank account, conclude a mobile phone contract, or obtain a loan. These facts demonstrate Schufa’s actual relevance.
How does the Schufa system work?
Schufa does not actively collect data about consumers in the Schufa entry itself. Instead, Schufa’s contract partners — the credit-granting companies — transmit relevant customer data to the credit agency. The only data Schufa itself collects for the Schufa entry come from public sources, such as debtor databases maintained by courts or declarations like an affidavit (Eidesstattliche Versicherung) or an application for personal or corporate insolvency.
Contract partners of Schufa include credit card companies, leasing companies, and credit institutions, but also retailers from brick-and-mortar and electronic commerce (online shops, mail-order houses). They query the Schufa entry.
Furthermore, telecommunications companies, insurance companies, and other service providers also request a Schufa entry. However, Schufa does not provide the same information to all companies; it differentiates between A- and B-list contract partners.
Schufa contract partners and the Schufa entry
A-list contract partners include all banks, savings banks, and other credit companies with the exception of private credit brokers. This group receives particularly extensive information via a Schufa entry about a potential borrower. The Schufa entry for A-partners includes both positive and negative indicators.
B-list contract partners comprise all non-bank entities that, upon request, only receive a negative list (for example, a list of overdue installment payments). Based on the information in the Schufa entry, the company decides on the customer’s creditworthiness — that is, whether the requested contract will be concluded or not. By the way, a contracting company may neither request information from Schufa nor transmit data to Schufa without the customer’s consent.
However, the customer effectively has no alternative but to sign the so-called “Schufa clause,” because without consent the company will not enter into the desired contract. In short, it can be said that without a Schufa query or without access to the Schufa entry, no contracts can generally be concluded in Germany.
What information is included in a Schufa entry?
The Schufa entry initially contains general data such as surname, given name(s), date and place of birth, gender, and all known addresses. In addition, the Schufa entry contains information about existing bank accounts (especially the number of current accounts and garnished accounts) as well as customer accounts with telecommunications companies, mail-order houses, online shops, and other retailers. All leasing and loan agreements are also listed with term and amount.
The so-called negative indicators result from reported and unpaid claims. However, a company may not report every claim to Schufa. A report may only be made if claims are due, have been properly requested multiple times, and are not disputed by the customer. Also stored are claims after a court decision and their settlement.
Note that already paid claims remain in the Schufa database and are only deleted after a certain period — for loans this is usually up to three years. Other information that has a highly negative impact on creditworthiness includes, for example, a submitted affidavit, an arrest warrant related to its submission, the filing or opening of a personal insolvency proceeding, as well as the dismissal or discontinuation of a consumer insolvency procedure due to lack of assets.
Information about the employer or professional activity, income amounts, and the balances on existing accounts are not stored. These details therefore do not feed into the assessment of expected ability or willingness to pay (creditworthiness). In addition to the information described, Schufa also transmits the so-called score on request. This is a value between 0 and 100 compiled and calculated from various pieces of information. The score is a statistical forecast of a customer’s expected future ability to pay.
What happens with a negative Schufa entry?
If negative indicators appear in your Schufa entry — for example, missed or late installment payments only made after repeated reminders — the consumer will have little chance of obtaining a loan, renting an apartment, getting a mobile phone contract, or opening a bank account. Poor creditworthiness therefore means that the consumer concerned may no longer participate in commercial life.
Many potential employers are also interested in the Schufa entry of prospective employees. Information about a personal insolvency and possible wage garnishments can therefore also result in the person losing their job or not being hired in the first place. A negative Schufa entry can thus have negative social and economic consequences.
A poor credit assessment can basically only be avoided if all claims are settled immediately and without waiting for reminders. In the case of disputed claims — for example, when devices are to be paid for that were already broken upon delivery — consumers should keep an eye on their Schufa entry and, if necessary, have the disputed claim removed. This can be done via a simple form available on the Schufa Holding AG website or through the Hannover consumer advice center (Verbraucherzentrale Hannover).
Consumers also have the right to view their Schufa entry free of charge once a year. On this occasion, one should also check that the information stored in the Schufa entry is still up to date. If necessary, a correction can be requested. However, settled claims can only be deleted from the Schufa entry after a certain period (usually three years) and thus remain a negative indicator until then.
How is Schufa structured?
Schufa Holding AG is a privately organized company. Its sponsors are credit-granting companies that want to protect themselves against possible payment defaults before granting a loan.
Schufa is a joint-stock company, with its shares distributed in varying proportions among commercial banks, savings banks, private and cooperative banks, as well as various trading companies.
Until the year 2000, Schufa was organized as an association and was then restructured into a holding AG. The credit agency is managed by an executive board and a supervisory board. The executive board consists of three people, the supervisory board of nine members. The latter also includes three regular employees of Schufa. The chairman of the executive board is currently Dr. Michael Freytag, formerly Finance Senator of the City of Hamburg. Holger Severitt and Peter Villa also form part of the executive board.
Schufa is headquartered in Wiesbaden, the capital of the state of Hesse. The company was founded as early as 1927 in Berlin under the name "Schutzgemeinschaft für Absatzfinanzierung".