How one piece of paper holds the key to your future in Germany

From being able to rent a flat to getting a phone line, a form called a Schufa can be a decisive factor for many. With NGOs calling for the procedure to be more transparent, what exactly is this paper and why is it so important?

How one piece of paper holds the key to your future in Germany
A Schufa Holding AG office in Berlin. Photo: DPA

For many newcomers in Germany, being able to show a Schufa – a form ordered online that assesses your credit rating at your bank – can be a headache. In order to get a contract for a flat here, for instance, one may need to show this piece of paper.

But one of the Schufa’s requirements is to provide proof of address – and this is where it gets tricky.

READ ALSO: What you need to know about renting in Germany

If you can’t show a German ID, the only other option is to submit both a copy of your passport and a Meldebescheinigung – a document which confirms your residence in Germany.

“It doesn’t work if one doesn’t have an address,” a Schufa customer representative told The Local.

To get one’s hands on a Meldebescheinigung, however, one requirement is to show one's current address at the time of application (e.g. a flat rental contract in Germany). This can mean a vicious cycle for non-German newcomers looking to rent a flat: without a Schufa, you might not be able to land a rental contract and without a German address, you can’t get your hands on a Schufa.

But the paper is just as important for locals as it is for foreigners.

Those seeking to get a loan at a bank or pay instalments on a car, for instance, may need to show this document too. And if it reveals a negative rating, it can have a direct impact on people’s lives. Negative ratings could mean that a person is refused a credit loan or only given one at a higher interest rate, for example.

The document essentially assesses a person’s creditworthiness via their previous payment behaviour. Data gathered from one’s Schufa is intended to provide information on the likelihood that the person will be able to pay his or her future bills.

Not to be confused for a credit check (it contains personal data that’s not meant to be passed onto third parties), the Schufa can be ordered online by private individuals.

But this assessment – via a so-called scoring system – is controversial because it uses a secret formula, reported Spiegel Online on Thursday.

Consumer watchdogs argue that people don't really know the exact nature of their Schufa assessment and aren’t able to see in detail how they are given a particular rating.

Schufa Holding AG – Germany’s biggest credit bureau – defends its evaluation method as “business secrets worthy of protection” that are “not to be disclosed to everyone.”

The credit bureau refers to a ruling by the Federal Court in 2014 which dismissed a woman's complaint. The woman had received a negative Schufa rating and demanded to know how the assessment had come come about.

Soon though there’s a possibility consumers may be able to know how their Schufa credit profile is created as NGOs have recently called for the procedure to be more transparent.

AlgorithmWatch and Open Knowledge Foundation aim for Schufa assessments to be more verifiable and have started an initiative called OpenSchufa, reported Tagesschau on Thursday.

The NGOs are calling on citizens to ask Schufa about their information and to share it with the organizations, which can be done anonymously. By collecting as much data as possible, the NGOs hope to find out more about Schufa’s rating procedure.

OpenSchufa will be finananced independently through crowdfunding. Once the data is collected, data journalists at Spiegel and Bayerischer Rundfunk will evaluate it.

While Schufa describes itself as “Germany's leading credit bureau,” it has competitors such as Bürgel or Arvato Infoscore which also rate a person’s creditworthiness via a scoring system.

For members


EXPLAINED: How to sublet your apartment in Germany

If you’re going away for a period of time or want to cut your living costs, subletting your flat can seem like an appealing option. But there are a lot of things you need to consider first. We break them down.

EXPLAINED: How to sublet your apartment in Germany

What is subletting?

A subletting arrangement is when a subtenant is allowed to use the main tenant’s apartment, or part of it, in return for payment.

Having visitors in your home, even for a period of up to six weeks, does not count as subletting and you do not have to inform your landlord. But be careful: If the visitor starts paying rent, this becomes a sub-letting arrangement and if the visitor stays more than six weeks in a row, you have a duty to inform your landlord.

READ ALSO: The most expensive (and cheapest) cities in Germany to rent a room

If close family members such as parents, children, partners or spouses move in with you, this is also not a subletting arrangement and is considered part of the normal use of the rented property. 

However, you should inform your landlord of such a change in circumstance, not least because at some point the new person living in your apartment will at some point need to register with the local authorities.

Do I have to tell my landlord?

Yes. Regardless of whether you are just subletting a room or your whole apartment, you have to inform your landlord and, in most cases, you are required by law to obtain the landlord’s permission to sub-rent. This applies for whatever time period you want to sublet for: whether it’s for a weekend or for six months. 

One exception to this rule is if you rent a room in a WG (shared accommodation) and all of the tenants are equal parties to the contract. In that case, it’s possible to sublet individual rooms without having to get permission from the landlord, but you should still inform them.

If you try to rent out your place or a room without your landlord’s permission and get found out, you could face legal action, or be kicked out of your apartment before the agreed notice period. 

READ ALSO: REVEALED: The most – and least – popular landlords in Germany

Can the landlord refuse to let me sublet?

If the main tenant has a so-called “justified interest” in subletting part of the apartment, they can demand that the landlord agrees to the sublet and even take legal action or acquire a special right of termination of the rental contract if they refuse.

However, this right only applies to a sublet of part of the apartment and not the entire space within the four walls – in this case the landlord is within their rights to say no to the sublet. 

When subletting part of an apartment, a justified interest must be for an important reason such as a needing to move abroad temporarily for a job or personal reasons, or a partner moving out and the tenant no longer being able to cover the rental costs alone.

In general, landlords shouldn’t refuse your request to sublet unless there are good reasons – for example if the apartment is too small. 

The landlord can’t reject your subletting application without good reason and if they do, you can gain a special right to terminate your rental contract, and can even sue for your right to sublet. 

What information will I need to give my landlord? 

Whether you are subletting a room or the whole apartment – you’ll need to give your landlord the following information:

  • Who is moving in
  • How long you will be subletting for
  • For what reason you plan to sublet

If you want to set up a WG (Wohngemeinschaft or shared flat) as the main tenant, you should discuss this with the landlord beforehand, as it may be worth changing the apartment status to a shared apartment in the main rental agreement. That way, you won’t have to send a new application every time a new roommate moves in.

Do I need a special rental contract?

If you are going to subrent your apartment, it is definitely worth having a contract. 

A contract between the main tenant and the subtenant is completely separate from the contract between the main tenant and the landlord, so all responsibilities arising from the sub-rental contract will fall on you and not the landlord. 

A man fills in the details of a rental contract by hand. Photo: picture alliance / dpa | Armin Weigel

At the same time, as the main tenant, you will still be liable to your landlord for any damage caused by the subtenant, so it is best to put a clause in the sub-rental agreement that outlines how this will be covered, and also to make sure that your subtenant has personal liability insurance. 

There are plenty of websites that offer templates of sub-rental contracts for you to use, and you should make sure your contract includes the following information:

  • The personal details of the subtenant
  • The sub-rental cost and any service charges
  • When these are to be paid
  • Which rooms may be used
  • How many keys have been handed over
  • Details of a possible deposit
  • The condition of the rented apartment
  • House rules, such as no smoking, pets, etc.
  • Liability for possible damages

How much can I charge?

You can usually negotiate the sub-rental price yourself, but you should be careful not to overstep the rental limit per square metre for your area. If you charge over this amount and your subtenant finds out, they have the right to demand the local square metre rental price and you may have to refund them the total amount of overcharged rent.

If you sublet a furnished apartment, you can add a surcharge based on what you will be leaving in your apartment. You should also factor in the energy and water costs.

READ ALSO: Everything you should know about renting a furnished flat in Germany

Do I have to get consent from the local authorities?

In some cases, you will also need to get permission to sub-rent from the local authorities to rent out your place. 

If you sublet in Berlin or Frankfurt, for example, and you want to advertise your flat for holiday rentals, you have to get approval first.

A wooden judge’s hammer lies on the judge’s bench in the jury courtroom in the Karlsruhe Regional Court. Photo: picture alliance / Uli Deck/dpa | Uli Deck

If you go ahead and rent on a site like Air BnB without approval, you can expect to pay a hefty fine. Though the highest possible fine of €500,000 is unlikely, there are numerous reports of people getting fines in Germany of several thousand euros.

Another important thing to remember is that, if you make more than €520 profit in a year from sub-renting, you have to include this in your tax declaration.

Can the landlord demand I pay extra?

If a landlord allows subletting, they can also demand a share of the extra income from the main tenant. The amount of the surcharge cannot exceed 25 percent of the sublease, however.

Useful Vocabulary

to sub-let – Untermieten 

sublease agreement – (der) Untermietvertrag

termination without notice – (die) fristlose Kündigung

ban on misuse – (das) Zweckentfremdungsverbot

special right of termination – (das) Sonderkündigungsrecht

justified interest – (das) berechtigtes Interesse

personal liability insurance – (die) Haftpflichtversicherung

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.