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What is the credit record score & how is it calculated?

The credit record score is a value that provides information about the creditworthiness of a contractual partner. The closer it comes to 100, the higher the payment behavior. But how does the credit record score come about and can it be improved if it is too low?

 

This is how the credit score is calculated

credit score is calculated

Everyone knows roughly what the credit record is and that today you can rarely rent financial transactions or even an apartment without a credit record query. The credit agency may of course not provide detailed information about who paid when, where and how high amounts of credit or not. But there is the so-called credit record score, which, the lower it is, the worse the creditworthiness.

How exactly the value is calculated is not known, because according to the Federal Court of Justice, a credit agency does not have to provide more precise information. The formula for calculating the score is therefore a secret, the data that is collected to determine the creditworthiness value is somewhat more transparent. This includes:

  • personal data such as address, date of birth and name
  • Account and credit card details or a possible overdraft facility
  • mobile phone contracts
  • leases
  • Customer accounts at mail order companies
  • guarantees
  • ongoing bankruptcy proceedings
  • outstanding credit installments
  • unpaid and dunning bills
  • Negative entries such as warrants or an affidavit

Religion or nationality may be used in the calculation as well as the employer, marital status, the amount of income or other assets and capital. However, this data may not be saved.

The credit record score is determined from all the above data together with the secret calculation formula.

 

How do you get credit record information?

credit score

To find out the score, you first have to submit an application for self-disclosure to the credit agency. This right to information is enshrined in law; credit record offers the required form for downloading directly from its own homepage.

According to the new data protection, the free information can be requested once a year. However, it takes up to 4 weeks for the information to be in the mailbox.

 

The credit record score table

credit score

If you receive your credit record score information in the post, you can see a value that assesses the creditworthiness. The base score describes the value that normally only the applicant can see.

There is another credit record score on the information, namely the industry score, which is tailored to the needs of the industry of the respective contract partner.

The base score and the industry score are each listed in a separate table, the level of the values ​​is known as the so-called credit record score Rating.

The maximum value is 100 and describes an almost non-existent risk ratio. However, only very few achieve this value, since a cell phone contract can reduce your credit record score. It doesn’t matter whether you pay your monthly installments on time.

The further the value decreases, the higher the probability that bills will not be paid or that credit agreements will not be met. Of course, every contract partner dreams of the highest possible credit record score, the rating table for the basic score looks as follows:

  • less than 50 = critical risk
  • between 50 to 80 = very high risk
  • between 80 and 90 = increased or high risk
  • between 90 and 95 = increased to satisfactory risk
  • between 95 and 97.5 = low to manageable risk
  • from 97.5 upwards = very low risk

If the credit record score is very low, it is high time to improve it.

 

How can the value be improved?

The higher the value on the credit record score table, the more likely it is to purchase on account or to approve a loan. Every industry has different criteria when it comes to signing a contract, for some 95 is a moderate value, others reject customers with this credit record score.

The credit record score is updated every three months. Negative entries such as an affidavit, an arrest warrant due to the refusal to provide oaths, dunning procedures, broken credit rates or even an overdrawn account – even if it is only the overdraft facility – reduce the credit record score.

Such things have to be avoided and those who continuously develop good payment behavior can improve their credit rating sustainably. This includes:

  • Check the entries in the credit record regularly for correctness and have them corrected if necessary
  • Pay credit installments and bills on time
  • to have no unused checking accounts or credit cards
  • approach the creditors in the event of late payment and thus avoid entries in the credit record Register
  • don’t take out too many small loans
  • don’t move too often
  • only make really important credit requests

In addition, it is always good to check your credit record score regularly and to react to any discrepancies. It sometimes happens that the people with the same name are swapped, so the credit record score is wrong. For this you should call the credit record credit agency immediately to solve the problem as soon as possible.