TIPS FOR OPTIMIZING THE SCHUFA SCORE
When thinking about SCHUFA, many people tend to experience palpitations, sweating and other accompanying symptoms of discomfort.
But that doesn't have to be the case, as SCHUFA can lose its terror and no longer need to frighten you. In this guide, we present 8 tips for improving your credit rating and show you how to "whip" your SCHUFA score into shape.
The basis of a positive credit rating is based on a continuous check of all data stored about you in the "Schutzgemeinschaft zur Kreditsicherung". This is because it is not uncommon for there to be incorrect data about you in the register, downgrading your creditworthiness. By checking, you remain able to act and can seek contact with SCHUFA and ask for a correction of incorrect information about you and your financial performance.
8 IMPORTANT MEASURES FOR THE IMPROVEMENT OF THE CREDIT RATING
It only takes minor gaffes and unreliable actions to ruin your credit rating and permanently affect your SCHUFA score. Restoring creditworthiness is more challenging in comparison. By taking thoughtful actions, reviewing the data stored about you, and avoiding unnecessary "juggling" of credit cards and credit inquiries, you can make your score positive from the start and protect yourself from the effects of a negative SCHUFA.
In these tips, we will show you what really matters and what you should avoid with regard to score values at SCHUFA. Even with small actions and a considered approach, you can avoid negative tendencies in the SCHUFA and be sure to raise even a tarnished credit rating again.
Read these tips carefully and follow the recommendations.
1. CHECK YOUR SCHUFA DATA REGULARLY!
According to DSGVO, you are regularly entitled to obtain a free SCHUFA report. This is a self-disclosure that SCHUFA must provide to you free of charge. The self-disclosure contains all notes in the register, so that you can check them for their timeliness and for errors.
If you come across outdated entries that have not been removed, contact SCHUFA in writing or by telephone. Set a deadline for the removal and reserve the right to check the completion. If you decide to file an objection by mail, do not save money at the wrong end. Send your objection by registered mail and in this way with the certainty that there will be no discussion about the arrival of the mail.
Anyone looking for free self-disclosure faces a transparency problem on the SCHUFA pages. Even though the Federal Data Protection Act has regulated free self-disclosure, the link is not easy to find.
Before you come across this option, you will find all other on-demand models with paid provision. Take a little time to search and you will find what you are looking for. Even if you do not currently apply for a loan or otherwise need to prove your creditworthiness, do not forgo the annual data check option. It is well known that SCHUFA often makes mistakes, especially when it comes to deleting settled debts.
Note: Even though SCHUFA is the largest and most important credit agency, it is not the only directory in which financially relevant data about you is stored. You should also request an annual free report from Arvato, Creditreform and Delta-vista and check any entries about yourself. When applying for a loan or renting an apartment, you will usually only be asked to agree to a credit check at SCHUFA. Nevertheless, you cannot rely on the fact that
Your potential contract partner will only check with SCHUFA and will not inquire about you with other credit agencies.
Schedule the check of SCHUFA and other credit bureaus at least once a year and set a date in this regard. By making a note in your calendar or sending a reminder via your cell phone, you will not forget to check it and, in case you apply for credit, you will be on the safe side and in the knowledge of what SCHUFA keeps of you and whether the claims are justified.
2. EXCLUDE UNNECESSARY DEBT!
Everywhere you go, you will receive offers for zero-percent financing and installment purchases. Keep in mind that these are purchases that will be reported to SCHUFA because of the payment method. It is irrelevant whether you pay reliably and abide by the seller 's contractual agreements. This is because it is well known that the frequency of using such offers has a major impact on your score and, consequently, on your credit rating. If you are able to pay for the smartphone or TV in cash, you should generally rule out financing and forgo installment payments.
As tempting as the offers are, they will not leave your credit rating untouched. You should only be inclined to make exceptions if, for example, you are buying a new car or making another important purchase that cannot be paid for from your current budget. In all other cases, patience is the best companion you should have with you on the path of a purchase decision. Installment payments and financing for smaller purchases are among the most common causes for rejection when applying for credit later.
Even when looking for a rental apartment, a self-disclosure with a negative SCHUFA score can put obstacles in your way and result in another applicant being awarded the contract. This is particularly annoying if you have no debts and have always paid your debts on time.
If your score is still negative, it may be a problem due to frequent installment payments or purchases with zero-percent financing.
Don't make rash purchases based solely on the desire to own something. Most debts are based on purchases that are not actually necessary.
If you then make extraordinary purchases in installments or finance them with a zero-interest loan, the path to a negative SCHUFA score is pre-programmed. Since your creditworthiness as assessed by Schufa also depends on the frequency of financing, you should decide and weigh things up with the utmost care. With regard to your score values, it is worthwhile to postpone some purchases until later and to pay the purchase amount through monthly reserves in the total amount and without financing.
You will see how easy it is for you to improve your credit rating and that you do not have to live with restrictions even without installment purchases.
3. PAYMENT RELIABILITY PAYS OFF - SETTLE INVOICES WITHOUT DELAY!
It is an unpleasant and actually unnecessary habit. Instead of paying an invoice as soon as it arrives, it sits there and ends up being forgotten. Either make transfers immediately or make a note in the calendar when which invoice is due. Keep in mind that the due date is not the day your bank sends it, but the date the money is received by the biller.
Your payment reliability raises the SCHUFA score and excludes the possibility of negative values and the associated restrictions. If you have doubts about an invoice or find its content partially or completely incorrect, do not wait long before notifying the invoice issuer. This is because a criticized, disputed invoice that has been reminded for verification is not reported to SCHUFA.
In this case, therefore, you will not incur any restrictions, even if you do not meet the payment deadline and wait for the result of the invoice verification. If a biller nevertheless makes a report to SCHUFA, you can object to this on the basis of the valid legal situation and point out the disputed value of the invoice.
Even one day of late payment can be your undoing if your contractual partner is very strict about notifying SCHUFA. Especially in the case of large billers , the notification of late payment is automatic, so that the SCHUFA is already informed 24 hours after the due date without receipt of money and notes the outstanding debt in your records. If you make a note of payment dates or pay incoming invoices without delay, you protect yourself from this faux pas, which leads to a downgrading of your credit rating entirely without malice.
Most late or unpaid invoices are based on forgetfulness, which is especially common with payment deadlines in the distant future.
If a biller has made a report to SCHUFA even though you have demonstrably paid the bill on time, you can object to the entry.
To do this, you not only contact SCHUFA, but also have the biller confirm receipt of the money. The entry is deleted and your SCHUFA score looks significantly better.
4. YOU SHOULD LIMIT BUSINESS RELATIONSHIPS WITH BANKS TO THE MOST NECESSARY.
Regarding this fact, you need to know that SCHUFA works with statistics and also calculates the score value based on probabilities. As solvent as numerous credit cards in the wallet may seem, on your SCHUFA score any unnecessary business relationship with a bank or other financial institution has a negative impact.
The fact is that people with few checking accounts and credit cards have a better credit rating than people who have business relationships with numerous banks. The duration of banking relationships also influences the SCHUFA score. Long-term business relationships are a sign of continuity and reliability. If you change checking accounts too frequently or use several accounts at the same time, this circumstance is considered erratic and negatively affects the credit rating .
Trouble-free and long-term banking relationships bring advantages. Frequent account changes, multiple checking accounts running in parallel and multiple credit cards are not a good basis for your score. What can you do? You can check your accounts and credit cards at any time and get rid of business relationships that you don't actually need.
Note: Call money or time deposit accounts do not bring a negative background with the SCHUFA. You can also use a business account and a private checking account without any problems and without any negative effects. On the other hand, current accounts at various banks and credit cards tend to restrict creditworthiness, that go beyond a Visa and Mastercard. Canceling unnecessary accounts is worthwhile and helps improve credit ratings. For private individuals, one checking account is sufficient. Any account at another bank will lower your SCHUFA score and affect subsequent credit applications. In most cases, the additional accounts are not needed at all, because they were just not canceled, for example, after moving and opening a new account at the new place of residence.
Note: A new checking account when you change residence will not affect your SCHUFA score.
If you are moving to another state or city, the desire to open an account with a locally based bank is perfectly legitimate and should not be viewed negatively. You can avoid problems with your credit rating if you combine the opening of the account with a move-in and the closing of the previous account by your new bank. You follow the same principle with credit cards.
5. CAUTION WITH CREDIT INQUIRIES
The age of digitalization has created entirely new possibilities.
This allows you to inquire about a loan online and obtain various offers from the bank without a personal introduction. But this is precisely the basis of a problem that tends to negatively affect your SCHUFA score. So how do you proceed if you are looking for real estate financing, for example, and want to obtain various offers for the benefit of comparing interest rates?
It is important that you do not make a specific credit request. Instead, inquire about the conditions, as this is a credit-neutral inquiry. Pay attention to the note also in the case of financial service providers who entrust you with a condition inquiry. Here it is advisable not to fill out or sign the self-disclosure of the intermediary. You should send the requested data by e-mail or in a Word document with the headline "Request for credit conditions".
In order to determine your options and make you an adequate offer, the commissioned bank or the financial intermediary you have chosen simply sends a credit-neutral inquiry that is not stored in your data. If, on the other hand, you use a classic credit inquiry, this will be recorded in SCHUFA and will stand in your way at the latest when you decide to take out a loan and have to prove a positive credit rating for approval. You can save yourself this hassle by proceeding with the utmost care when making inquiries and only requesting the conditions, not the classic offer. The bottom line is that you can find all the information that is relevant for your decision in the conditions.
Once you have selected a condition offer, you can inform the potential contractual partner of your decision and they will initiate all further measures. Your SCHUFA score has not been damaged, so you do not have to worry about creditworthiness.
6. HIGH DISPO CREDITS ARE A SIGN OF YOUR RESPECTABILITY
An overdraft facility on your checking account does not have to mean a restriction on your credit rating.
Here, the opposite is true, even if it seems unusual at first glance. If you are granted a high overdraft facility by your bank, it means that the bank trusts you and rates your solvency very highly. This, in turn, is a good criterion for SCHUFA, which also sets your score higher. Most overdraft facilities are deposited in SCHUFA, so you can assume that they will be included in your score.
In order to improve your credit rating, you may well ask for a higher overdraft facility when talking to your bank.
This does not mean that you have to exhaust it. After all, overdraft facilities that are not utilized at all are also rated positively. On this point, "more" is a better choice than less. As a long-time customer of your house bank, you will usually get this option, provided that your demand fits your income or possible collateral also deposited with the bank, such as a savings account.
7. REFRAIN FROM USING PARTIAL PAYMENT FEATURES ON CREDIT CARD BILLS.
Most banks offer their customers credit card bills in installments.
This means that your credit card purchases will be charged in installments rather than in one lump sum.
Partial payments increase your credit default risk, even if the amounts are collected from your checking account without complications.Partial payments also havea negative impact on theprobability values regularly transmitted to SCHUFA.This is because any form of installment payment, including partial payment on credit card bills, increases your personal credit default risk. The problem with the partial payment function on credit cards arises when you apply for financing. Partial payment affects the interest rate conditions for additional loans and means that you have to accept a much less favorable interest rate.
In general, you should refrain from such an offer, as your SCHUFA score will drop simply because of the installment facility on the credit card, even if you do not use it at all and pay off your debts in total once a month by direct debit.
8. USE THE CREDIT CARD AS A "RESERVE" AND ASK YOUR BANK FOR THE HIGHEST POSSIBLE CREDIT LIMIT.
Certainly, paying with credit cards is easy and in many cases also a good solution. For example, when you book hotels and travel on the Internet, you often have no other option available. In these cases, you can resort to credit cards without incurring any disadvantage in your SCHUFA score. On the other hand, you should avoid local purchases with credit cards, which you can also settle in cash or with your checking card, for example.
A high credit line positively influences your score at SCHUFA and, like a high overdraft facility, is an indication that the bank trusts you and classifies you in the internal scoring with high creditworthiness. Applying for a credit card may be accompanied by an inquiry about the highest possible credit limit. You do not have to exhaust this limit and you will not be penalized if, instead of the original limit ofIf you take out a credit line of, for example, 10,000 euros instead of the 5,000 euros originally planned, you will not be disadvantaged in any way.
The annual fee for your credit card is due regardless of the credit amount and is not changed in its amount. For SCHUFA, a high credit limit, especially if you do not use it up and only use it as a reserve, shows a high level of trustworthiness that the house bank has in you.