The powerful Schufa, whose assessment decides on credit or no credit, was decried as a black box for decades. Nobody knew how the life-changing Schufa report came about. Right now this will finally end up here. Schufa itself has developed a simulator that anyone can use to test their own creditworthiness. Astonishing things come to light.

The Schufa wants to be loved. The Wiesbaden-based company, which many consider an authority, decides whether people in Germany can get a loan or not, whether they will be accepted as tenants for an apartment, whether they can go to a car dealership as a car buyer and have a car financed or just completely simply want to buy in installments on the Internet.

The company thus intervenes deeply in the lives of many people and is often the bogeyman: Anyone who gets a bad reputation from this overpowering institution does not receive a loan. Complaints about the Schufa have been hailing for years, and even politicians have not held back: “Currently, the establishment of the Schufa score is still a black box,” complained Green Consumer Protection Minister Steffi Lemke in the spring.

This is to change now. Responsible for this is Tanja Birkholz, who has been at the head of Schufa for a good two years and has been trying to shed light on the black box ever since. Now there is the first result: Schufa has constructed a simulator for its website, with the help of which everyone can calculate their own creditworthiness.

The tool, which has been live since 6 p.m. on October 13, works completely anonymously and asks seven questions that are also used as criteria in an actual credit check by the Schufa. HERE you get directly to the tool. For example, the number of moves. Anyone who has moved with their household in the last three years has a worse hand at the Schufa than those who show more consistency. It’s about the number of credit cards: up to two is good, beyond that the credit rating drops. It’s about how long a checking account has existed or how many installment loans have been used in the recent past.

The simulator is close to reality. In real life, Schufa still has a few more queries in store when it comes to the final score, but the test already shows the trend very reliably. It becomes clear how the dreaded key figure comes about in the first place. And when presenting the simulator, Birkenholz makes it clear that knowing the creditworthiness of customers and thus the data collection efforts of Schufa is beneficial for everyone: If creditors had no information about the creditworthiness of debtors, an average of twelve percent of all receivables would be defaulted.

To compensate, banks would have to charge interest rates that would be so high that hardly anyone could afford them. That would be bad for businesses and consumers. With credit information, such as that provided by Schufa, the default rate can be reduced to two percent, which is why many everyday loans can come about in the first place. The Schufa regulates credit transactions like a traffic light, if it turns red and someone still drives through the intersection, the accident is quite likely.

But of course the information that Schufa collects also has its blemishes: For example, anyone who moves to take a new, better-paying job still receives a deduction from the scoring because Schufa does not know the reason for the move. And anyone who changes their checking account because they were annoyed with their bank will also receive a deduction in the note because the Schufa has to delete the information from the old checking account out of consideration for data protection. No information is often worse than any, is one of the surprising findings that Birkenholz passes on.

And another number is interesting: over nine percent of the almost 70 million Germans for whom data is available, the Schufa has “hard negative information” in hand. Despite repeated requests, you have not paid for something and are therefore struggling to borrow money for the time being. The banks add their knowledge of red and black numbers on the customers’ accounts to the findings of the Schufa and then decide on a loan. It is important to Birkholz that this mechanism is clear: even if the banks give negative credit bureau information as the reason for refusing a loan – the decision to grant a loan is made by the financial institutions and not by the credit checkers.

It is also the German banks that own the majority of the Schufa company, including the savings banks and the Volks- und Raiffeisenbanken with more than 50 percent of the shares. It was they who thwarted an attempt by a Swedish financial investor who wanted to buy Schufa in the spring. With its annual turnover of around 250 million euros and a pre-tax profit (EBIT) of 70 million, the company attracts investors like honey attracts bears.

In addition, there is a unique data collection that can prove useful in the digital age. In view of the around 300,000 creditworthiness queries that Schufa receives every day, the data set is growing at the speed of light, so to speak. Savings banks and Volksbanken are also the ones who pride themselves on their proximity to private customers and often finance their everyday consumption. Banks and companies hire Schufa to collect data on consumers’ creditworthiness and to warn creditors about customers who have previously had problems repaying a loan. The companies therefore swear by the Schufa, trading houses such as the Otto Group belong to the group of Schufa investors.

The simulator, which has now gone live, is intended to be the first step towards a Schufa app in which consumers can see which information about them leads to which credit rating. Until then, however, some in-house lawyers at Schufa and data protection officers around Schufa have to be convinced that this could really be a good idea. Birkenholz will have to continue to persuade.