By Sylvia Haden and Yana Rudenko
Anyone who has completed private insolvency proceedings can now get a fresh start more quickly: Schufa has shortened the storage period for a discharge of residual debt from three years to six months. This was announced by the credit agency on its website.
https://www.schufa.de/ueber-uns/presse/pressemitteilungen/schufa-loescht-restschuldbefreiung-sechs-monaten/
This means that six months after the end of the procedure, no one will know that someone was once overindebted and still had outstanding debts. Schufa is thus reacting to ongoing court cases, including those before the European Court of Justice. More about the update:
https://www.schufa.de/themenportal/restschuldbefreiung-5-fakten-loeschfrist/
Although almost everyone has heard of Schufa Holding AG, much is unknown about this company. The credit agency, based in Wiesbaden, Germany, accompanies people throughout their adult lives, whether they are looking for an apartment, getting a loan or signing a cell phone or landline contract, for example. Schufa (formerly called “Schutzgemeinschaft für allgemeine Kreditsicherung”) collects data on consumers’ creditworthiness. It works with more than 9,000 contractual partners who report financial transactions to the credit agency. These are: Insurance companies, energy suppliers, telecommunications companies, mobile phone companies, credit companies, mail-order companies, retailers, and banks and savings banks. This is how Schufa earns money. The data collected provides information about the customer’s creditworthiness, i.e. the likelihood, for example, of someone being able to repay a loan in full within the agreed period. Before signing a rental agreement, landlords want to be able to use a Schufa report to better assess whether the potential new tenant will pay the rent on time.
Who can request data from Schufa?
When a financial transaction is concluded, a contract is usually signed. This often contains a so-called Schufa clause. This entitles the company to request data about the respective customer from Schufa. Banks, savings banks, credit card companies and leasing companies receive the entire scope of information stored about the customer. Other contractual partners only receive information if a negative entry is stored. These can be, for example, entries about foreclosures, terminated loans, insolvency applications or default summonses.
When it comes to renting an apartment, the landlord usually asks for a Schufa report. The landlord requires the declaration of consent from the future tenant. In practice, the tenant usually applies for the Schufa report himself.
If the consumer wants to have an insight into his stored data, he can apply for this once a year free of charge at Schufa (so-called self-disclosure according to §34 of the Federal Data Protection Act). This can be done online. Further information: www.meineschufa.de. Anyone submitting an application should make sure to choose the free version, as there are also offers on the site that are subject to a fee.
What does the Schufa base score mean?
This is a point value that is determined as part of the self-disclosure process. It is often determined in the context of a credit application. If the score is above 97.5 percent, the consumer is certified as having a “very low risk of default”. Conversely, this means that he or she has a very good chance of obtaining the loan. The lower the percentage, the lower the chance of getting the loan. According to a 2014 ruling by the German Federal Court of Justice, Schufa is not obliged to disclose the formulas used to calculate the score. They fall under trade secrecy. As a rule, Schufa stores the following data: Personal data, such as name, date of birth and address. Information on bank accounts, credit cards and loans (including overdraft facilities), current cell phone and leasing contracts, accounts with mail-order companies, negative features such as insolvency proceedings or due, dunned and unpaid receivables (for example, unpaid loan installments). Schufa uses this information to determine the credit score. It draws conclusions about the probability of future payment behavior from the consumer’s previous payment reliability. In addition, frequent changes of residence, older age, frequent borrowing or even credit inquiries can have a negative effect. Those who pay bills and installments on time and cancel unused checking accounts and credit cards receive a positive rating. This, in turn, is helpful for any further purchases or financial transactions.
However, certain data may not be stored at Schufa. These include: Assets and capital, occupation, employer and income, marital status, religion and nationality. Further information: https://www.verbraucherzentrale.de/sites/default/files/2020-01/AH_Verbraucherschutz_Gefluechtete.pdf
It may happen that Schufa has stored incorrect data. If one would like to have this corrected, an application must be made to Schufa. Then this data will be deleted or changed. There are companies that offer loans without Schufa information. This is associated with risks for customers, warn the consumer centers. More info:
https://www.verbraucherzentrale-bremen.de/wissen/geld-versicherungen/kredit-schulden-insolvenz/15-fragen-und-antworten-zur-schufa-mit-einem-musterbrief-wie-wehre-ich-mich-gegen-falsche-eintraege-bei-der-schufa-11102
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