How SCHUFA works

Our work makes it convenient and quick for people to perform transactions and for companies to trust them without knowing them personally. For providers of consumer credits, goods and services, it reduces the risk of default, which helps them do more business and offer customers better terms.

This is how we support growth and prosperity in Germany. Our solutions accompany business transactions all the way from identification and credit rating, to fraud prevention, to regulatory compliance. We do a lot to prevent money laundering, which helps to limit its economic damage.

The idea of setting up SCHUFA in 1927 originated with an employee at “Berliner Elektrizitätswerke” (Berlin electricity company). Because its electricity meter readers knew who paid their electricity bills regularly and on time and who didn’t, he came up with the idea of offering “good payers” electrical appliances such as refrigerators on instalments. Those people, after all, were known to fulfil their payment obligations.

This meant that significantly more people were able to enjoy modern electrical appliances. Other companies became interested in the principle of enabling credit transactions on the basis of existing payment records. This is how the Schutzgemeinschaft für allgemeine Kreditsicherung – the General Credit Protection Association, or SCHUFA for short – was eventually founded, where companies could report and query information on their customers’ payment behaviour.