Creditworthiness

Creditworthiness (Kreditwürdigkeit, Bonität) is the assessment of how likely it is that you will repay a loan as agreed.

How is creditworthiness checked in Germany?

1. Schufa score (the most important factor):

• Scale: 100–999 points (higher = better; formerly 0–100%)
• over 97.5%: very good – best terms
• 95–97.5%: good – good terms
• 90–95%: satisfactory – higher interest
• under 90%: problematic – loans become difficult

2. Proof of income:

• Regular income (salary, pension, rental income)
• Length of employment
• Type of employment (permanent fixed-term self-employed)

3. Household calculation:

• Income minus fixed costs = income available for instalments
• Rule of thumb: the instalment should be max. 35–40% of net income

How to improve your creditworthiness:

• Pay bills on time (biggest influencing factor)
• Close unnecessary accounts/credit cards (every account counts as a risk)
• Check your Schufa report (free once a year via meineschufa.de)
• Have old negative entries deleted (3 years after settlement)
• No frequent credit enquiries ("conditions enquiry" instead of "credit enquiry" when comparing)

The difference costs money:

€10,000 loan, 5 years:
• Top creditworthiness: 3.5% = €910 total interest
• Poor creditworthiness: 9.9% = €2,670 total interest
• Difference: €1,760 – just because of the score!