The SCHUFA – speaking of construction financing, what should you keep in mind?

Whenever you would like to build a house or buy a property and you need a financing solution for this purpose, there is no way to avoid the following institution: The SCHUFA (a protective association for public credits) is a data collection point. Informations deriving from telecommunication agreements and from the trading and financing sector are recorded there. Most of these entries refer to instalment credits, real estate loans and to current accounts. Furthermore, negative issues such as arrest warrants or inability to pay are reported and registered there. In doing so, the SCHUFA does not verify that the stored records are correctly drawn up. Negative entries have an impact on the SCHUFA scores and they affect upcoming credit decisions or condition negotiations at the banks.

What exactly is the SCHUFA score?

The SCHUFA score is an internal credit score issued by this protective association for public credits, arising from the data of which it has been notified. That kind of score is expressed in percentage and it is supposed to assist loan providers on issues relating to creditworthiness. In case of a high score value, nothing speaks against awarding a loan from the SCHUFA´s perspective. In this context, it is important to be aware of the following facts: The existence of several registered current accounts or of listed loan condition requests has already a negative impact on the SCHUFA score. Therefore, please have in mind, that less is more. If you always serve the existing instalment credits on time, nothing stands in the way of a good score value. And if you are unsure, whether there could be negative entries at the SCHUFA, you will have the opportunity to make a free retrieval at the SCHUFA, once a year. Should negative facts been listed there, you will have the option of discussing openly this issue with your agent, and in doing so, you could explain how all this happened. In case of a financing application, the banks will regard such kind of openness as positive. You don´t need to worry at all that negative records could be saved forever and ever. For each negative entry at the SCHUFA, there is a specific deletion period. Once it has expired, the respective record will no longer be evident.

It makes absolutely sense doing a checkup at the SCHUFA, from time to time, in order to make sure that entries have been erased where required, and to act quickly in case of incorrect records. Should wrong informations be registered at the SCHUFA, you have the right to have it deleted immediately. This claim must be reported at the SCHUFA without delay, in written form along with the relevant documents.


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Information about the author:

Alexandra Schneider is a certified bank business administrator and she writes about up-to-date topics, for FinanzierungsExpert.