The washing machine is broken, a new car is needed, and the fast notebook needs to be financed: in these cases, it makes sense to take out a loan for the financing. After all, interest rates are still extremely favorable. Existing reserves, if any, would not be touched for this purpose. But attractive interest rates and good conditions you usually get only with a good schufa score.
So what do you need to know about the schufa score and how do you find out how a bank rates your financial reliability?? Here you can find out why a good credit rating is important, what the schufa score indicates and how you can successfully improve it.
Why is the credit rating so important?
Credit rating means creditworthiness, and a bank means this term quite literally. Before your bank concludes a loan agreement with you, it wants to know whether you will 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, they will reject your credit application. If you still get your financing, you will usually have to pay higher interest rates. You can 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 the credit assessment: schufa. Schufa – the "schutzgemeinschaft fur allgemeine kreditsicherung" – is one of the credit reporting agencies. Here are all the data stored about you, which are in any form important for the granting of credit.
Schufa stores information for each consumer that allows conclusions to be drawn about his or her financial circumstances. This includes, for example, loans taken out, contracts concluded with mobile communications providers, leasing contracts, current accounts opened or credit cards issued. Over the years, schufa collects a large number of entries about each consumer. Schufa calculates the so-called schufa score from this information.
Behind the calculation lies a very complex mathematical-statistical procedure. The schufa score is practically a key figure for your creditworthiness. The ratio is past-related. It is determined from the borrower's data. Nevertheless, it should allow conclusions to be drawn about the reliability of the customer as a contractual partner and borrower. So every time a loan is granted, the bank checks its creditworthiness and carries out a credit check for this purpose.
How to find out your schufa score?
Check your credit rating regularly. To do this, ask your schufa score directly at schufa. You can do this once a year for free and online. It is important that they copy the data according to art. 15 DS-GVO request. How to request your score from schufa, you can find out here.
Before you apply for financing, it is very useful to know exactly your financial situation. Your schufa score is a must. By the way, there are other credit bureaus besides schufa. These organizations are usually privately organized. A schufa report on a person is relatively easy and quick to obtain. With other credit agencies it can 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 idea 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 to check the entries. If your schufa score is not very positive, you will unfortunately need some patience. Because you cannot 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 information on your current checking accounts and your mobile communications contracts. Short- and long-term credit agreements are listed, as are credit cards issued. You can also find the leasing contract for your car in your credit report. It is now important to check your schufa entries carefully.
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 find that your schufa report contains incorrect entries or that the data is out of date, have it corrected immediately. Correcting incorrect entries is one of the more short-term levers you can use to improve your credit rating and schufa score.
Also make sure that old data is deleted. This includes having information about credit cards that are no longer used or checking accounts that have already been canceled removed from their schufa records. Schufa calculates the score for its creditworthiness at three-month intervals at the beginning of the quarter. In the case of very short-term credit checks, it may therefore be difficult to strengthen your creditworthiness.
How to improve your schufa score in the medium term?
Paying bills and outstanding receivables on time
In addition to these measures, there are other clever tricks that can help you score better in the next credit check. They work rather in the medium term, so you should keep an eye on them regularly. Always make sure to pay outstanding invoices in due time. You should also settle your debts from loan agreements in good time.
If you fall into arrears with several installments, this will first result in several reminders and later even in a reminder or enforcement notice. The notices are among the negative entries that you should never risk. Negative entries of this kind ensure a negative credit rating for many years to come. And it is very difficult for them to get a loan with it.
Do not overdraw the overdraft facility
Also try not to overdraw your overdraft facility. Your bank will gladly grant you a generous credit line if you earn a regular salary. But the interest on it is expensive, and a constantly overdrawn account does not contribute to a good credit rating. Under certain circumstances, it can be helpful to have only a small dispo credit granted. Then you will not be tempted to overdraw your account too much.
Avoid small loans and reschedule loans
Also avoid small loans. It may sound tempting to finance your laptop or coffee machine with a small loan. However, even small loans create schufa entries that damage your creditworthiness. If you have several small loans and other financing, such as construction financing, a debt restructuring can be worthwhile. Often, rescheduling can result in more favorable rates that give you additional financial leeway.