Settling in Germany can prove rather difficult if you are not at the same time beginning to work for a larger company, university or the like, which will assists you at settling in Munich. When the average Joe/Jane moves to Munich, tries to rent an apartment, finance a car, purchase furniture or consumer electronics, or wishes to conclude a mobile phone contract allowing him/her to make calls before they are billed, the question of his Schufa credit report is usually raised. Life can be rather difficult without a Schufa report in the beginning (or even worse in the case of a bad report).
SCHUFA, this abbreviation stands for "Schutzgemeinschaft für allgemeine Kreditsicherung" (General Credit Protection Agency). As Germany's leading credit bureau, is used as a source of credit information for corporate and private customers, holding credit rating information about 66.4 million persons and 5.2 million companies. The credit report company can also make reports about EU foreigners from Belgium, Greece, Ireland, Italy, Lithuania, the Netherlands, Austria, Poland, Sweden, Switzerland, Slovenia and Spain. Renting without a Schufa report usually means that you’ll have to pay the maximum (by law) three rents in advance, or the landlord will take a tenant with a nice report. As a foreigner, a Schufa record will be automatically created when you have completed your registration at the Bürgerbüro and after you have opened a bank account. If you are late with your payments a few months, the report will show that. But don’t worry, if you pay in time for the next three years, you’ll get a clean Schufa-Auskunft again.
Tip 1: As a foreigner, try to “populate” your record with positive entries by paying your phone bills, electricity and gas bills, etc, on time. It will come handy when you will want to apply to a loan in the bank. In my experience, even if you have been in Germany for a while, if your SCHUFA Auskunft doesn’t look clean, it will be hard to convince your bank.
Tip 2: You are entitled to one free record per year that you can also get from the same website here. The process takes more time though. Download the form by clicking on the British flag for the English version. Don’t forget to add a copy of your passport AND a copy of your Meldebescheinigung/Registration with it.
Tip 3: The SCHUFA will hold information about you long after you leave Germany and at a European level too. If you plan to leave unpaid bills behind and then come back to Germany, you might have to think twice before doing it. It could become harsh back fire in the near future.
Tip 4: This system makes that your personal wealth, your personal property or yearly income doesn’t have any influence on your record ! You could be the richest man in the world but still have the worst record if you didn’t pay your bills. Just bear that in mind.
(The tips are courtesy of settle-in-berlin.com)