About Schufa

Schufa has operated since 1952 as a private credit reporting agency that collects economically relevant information about a private individual or a company. Schufa's primary goal is to comprehensively inform credit-granting companies such as banks about the risk of default using a score to assess creditworthiness and to protect them against payment defaults.

For this purpose, Schufa collects approximately half a billion data points from more than 66.2 million people in Germany. To enable targeted and manageable reporting, individual entries are recorded, evaluated and transmitted by around 752 employees.

Information about possible payment difficulties and the risk of over-indebtedness is one of Schufa's largest sources of income. As a private company, Schufa is therefore primarily financed by banks, financial institutions and corporations, which as permanent contractual partners can request targeted information about the creditworthiness of their borrowers.

To ensure structured and clear reporting, Schufa developed a complex scoring procedure in which the collected data on a person or company can be evaluated in a points system. Mathematical-statistical methods were developed around this scoring value by Schufa to enable a reliable evaluation of the collected data.

Calculation and evaluation of Schufa scores

With the scoring concept, Schufa aims to create a prediction about a future event. For determining the probability values, data collected from the past play a key role and are divided into six different categories.

The sector "previous payment defaults" includes all credit transactions that were not performed in accordance with the contract by the debtor or the creditor.

The number and extent of the concluded credit transactions are also taken into account in the category "credit activity in the last year."

The areas "credit utilization" and "length of credit history" provide additional information about the type of credit relationships and their duration.

Finally, basic information about the identity of a person or a company is stored in the sectors "general data" and "address data".

Depending on their relevance, the information flows into the mathematical calculations and ultimately produces a score value that describes the probability of fulfillment of a credit transaction.

A score value of, for example, 80 percent indicates that the probability of timely payment is 80 percent. That would mean that contractual performance would occur in only 80 out of 100 cases.

The score values are categorized as probability indications into six classes, where a higher probability corresponds to a lower risk assessment. For example, score values of more than 97.5 percent are associated with a very low risk, whereas a score value of less than 50 percent should be classified as a very critical risk.

In addition to a uniform score value, Schufa also calculates modified scores that are associated with a different risk assessment. This is because the scoring procedure must be adapted to the individual needs of a credit-granting company. Thus, some data may be rated as highly relevant when concluding an installment loan from a mail-order company, although they may play no role when concluding a mortgage loan.

Overall, in addition to a base score, there are eight different industry scores. These are generally only transmitted to Schufa's contractual partners, whereas the base score can be requested at any time as part of a self-disclosure. This is possible via the internet, by post or by telephone.

The Schufa base score

Due to the large number of score values, which sometimes differ significantly, Schufa developed a uniform score value — the base score. This is a central reference value that is mainly provided in the personal report.

The common scoring procedure is used to determine the base score, whereby individual data are generally assigned a neutral weighting. The probability of fulfillment is given in a range from 0 to 100 percent, although the maximum of 100 percent and the minimum of 0 percent can never actually be reached.

The Schufa base score is generally recalculated after the start of a quarter, provided new data have been submitted by contractual partners. In a study conducted by the Federal Ministry of Food, Agriculture and Consumer Protection (BMELV), the majority of test subjects achieved a score value between 89 and 99 percent.

A Schufa base score of less than 89 percent was reached by only 9 percent. A quarter of the candidates in the sample, however, achieved a Schufa base score of more than 99 percent. For only four percent of the candidates, no base score was available. This can be attributed to the fact that these candidates had not taken out any loans and had not opened accounts with Schufa contractual partners.

Request your own base score

Anyone who wants to request their own evaluation from Schufa is initially directed to paid models. However, there is also the option of a simple and free request. Under the item "Data copy (pursuant to Art. 15 DS-GVO)" an overview can be requested. This is transmitted in the form of a table.

This table includes all data that were used for the evaluation and that were passed on, i.e. all information that was transmitted to Schufa. These can be mobile phone contracts, ongoing loans at banks, negative entries from unpaid invoices, or even simple loan offers requested from banks.

Here you can also check whether old entries are still present that should already have been removed from the files. For such entries you should request deletion, as they affect your creditworthiness.

Also part of the table is the score value, the rating level and the probability of fulfillment. For better understanding, the meaning can be read at the end of the table.

Advantages and disadvantages for consumers

In general, the scoring procedure helps a company make a reliable yet quick decision. This indirectly also has a positive effect on consumers' purchasing behavior.

With Schufa, a credit-granting company can offer fast and convenient contract processing. Credit transactions here do not only include lending money, but all services whose payment is not made immediately. This applies, for example, to an order in a mail-order company or to the conclusion of a mobile phone contract. Through Schufa's information, the seller receives an overview of the probability that the contract will be fulfilled.

In the case of a positive evaluation, the customer thus receives favorable conditions after a comparatively short creditworthiness check. In the case of a low score value, however, a Schufa report can also negatively affect a consumer's financial situation. This ranges from above-average high interest rates when taking out a loan to the rejection of a contract.

Critics of Schufa therefore argue that the scoring procedure would pose an additional burden for the consumer and could make it more difficult to get out of a debt situation. Supporters of Schufa, on the other hand, claim that a poor score value can have a positive effect on a consumer's financial situation. A poor Schufa score would protect the consumer from over-indebtedness and exclude the risk of a debt spiral.

Market transparency is also an indispensable means of creating widespread trust between sellers and consumers and thereby achieving a dynamic between supply and demand. Significant counterarguments, however, address the risk of misuse that could arise from an unjustified Schufa entry. In addition, many federal data protection commissioners criticize that the amount of data submitted to Schufa could lead to the development of personality profiles of consumers. The privacy of consumers could thus no longer be guaranteed.