The washing machine is broken, a new car is needed, and the fast notebook should be financed: In these cases, it is obvious to take out a loan for financing. Finally, interest rates are still extremely favorable. You don't want to touch existing reserves, if any, for this purpose. But attractive interest rates and good conditions are usually only available with a good Schufa score.
So what do you need to know around the Schufa score and how do you find out how a bank ranks your financial reliability? Here you can find out why a good credit rating is important, what the Schufa score shows and how you can successfully improve it.
Why is the creditworthiness so important?
Creditworthiness means creditworthiness, and a bank means this term quite literally. Before your bank signs a loan agreement with you, it wants to know whether you repay your debts on time and as agreed, i.e. how creditworthy you are.
For this purpose, the bank carries out a credit check. If the result is positive, you will receive a commitment for the desired loan. If the result of the credit check is negative, it rejects your loan application. If you still get your financing, you usually have to pay higher interest rates for it. So you will only get attractive interest rates if you have a good credit rating.
What role does the Schufa score play in creditworthiness??
Your bank has an important contact for checking your creditworthiness: the Schufa. The Schufa – the "Schutzgemeinschaft fur allgemeine Kreditsicherung" – belongs to the credit agencies. This is where all the data about you is stored that is in any way important for granting credit.
Schufa stores information for each consumer that allows conclusions to be drawn about your financial circumstances. This includes, for example, loans taken out, contracts concluded with mobile phone providers, leasing contracts, current accounts opened or credit cards issued. Over the years, Schufa collects a lot of information about each consumer. Schufa uses this information to calculate the so-called Schufa score.
Behind the calculation lies a very complex mathematical-statistical procedure. The Schufa score is practically a key figure for your creditworthiness. The key figure is based on the past. It is determined from the data of the borrower. Nevertheless, it should allow conclusions to be drawn about the reliability of the customer as a contractual partner and borrower. Each time a loan is granted, the bank therefore checks your creditworthiness and carries out a credit check for this purpose.
How to find out your Schufa score?
Check your creditworthiness regularly. To do this, check your Schufa score directly with Schufa. You can do this once a year free of charge and online. It is important that you check the data copy by type. 15 DS-GVO request. You can find out how to request your score from Schufa here.
Before you apply for financing, it is very useful to know your financial situation in detail. Your Schufa score is an essential part of it. Incidentally, there are other credit agencies in addition to Schufa. These organizations are usually privately organized. A Schufa report on a person is relatively easy and fast to get. With other credit agencies it may take a little longer. But what to do if the Schufa score is worse than expected?
Find a favorable loan now, even with a negative credit rating Start a loan comparison here
How to improve your Schufa score in the short term?
Request a Schufa report for a better financial overview
To improve your credit rating, it is best to get an overview of your finances. If you note down all your income and expenses, you will get a good view of your financial situation. This is important so that you always pay your bills on time. On top of that, you can uncover savings potentials.
It is worthwhile to request a Schufa report at regular intervals and check the entries. If your Schufa score does not reveal much positive information, you will unfortunately need to be patient. Because you can not improve your score in the short term. However, the Schufa information also helps you to get an overview of your current finances.
Here you will certainly find details of your current checking accounts and your mobile phone contracts. Short- and long-term credit contracts are listed as well as issued credit cards. You will also discover the leasing contract for your car in your information. It is important now to carefully check your Schufa entries.
Get incorrect and old Schufa entries corrected
It happens again and again that Schufa entries are wrong. But you have a right to correct Schufa entries. If you discover that your Schufa report contains incorrect entries or that the data is outdated, have it corrected immediately. Correcting incorrect entries is one of the more short-term levers you can use to improve your creditworthiness and your Schufa score.
Also make sure that old data is deleted. This includes removing information on credit cards that are no longer used or current accounts that have already been cancelled from your Schufa entries. Schufa calculates the score for your creditworthiness at three-month intervals at the beginning of the quarter. Therefore, with very short credit histories, it can be difficult to strengthen your credit score.
How to improve your Schufa score in the medium term?
Pay bills and outstanding debts on time
In addition to these measures, there are other clever tricks to help you score better on your next credit check. They work more in the medium term, so keep an eye on them regularly. Always make sure to pay outstanding bills on time. You should also settle your debts from credit agreements in good time.
If you fall behind with several installments, this will first result in several reminders and later even a reminder or enforcement notice. The notices are among the negative entries that you should never risk. Negative entries of this kind will ensure a negative credit rating for many years to come. And you'll have a hard time getting a loan with it.
Do not overdraw your overdraft
Also, try not to overdraw your overdraft facility. While your bank is happy to grant a generous credit line if you have a regular salary. But the interest on them is expensive, and a constantly overdrawn account does not contribute to a good credit rating. In some circumstances, it can be helpful to have only a small overdraft credit granted. Then you will not be tempted to overdraw your account too much.
Avoid small loans and reschedule credit
Also, avoid small loans. It may sound tempting to finance your laptop or coffee maker with a small loan. But even small loans create Schufa entries that hurt your credit rating. If you have several small loans and other financing, such as a construction loan, a debt restructuring can be worthwhile. Often, rescheduling can result in more favorable rates that give you additional financial leeway.