Important basis for successful payday loan application

Private credit faced. First and foremost, it is banks that obtain Private credit information before approving a loan or providing a line of credit on the checking account. The Private credit and their stored data are not only very important these days in the finance sector, but also in other projects of great importance.

Each German citizen has the opportunity to obtain once a year even a free Private credit information. You should make use of this service, because sometimes it can come to wrong or outdated entries, which in the worst case lead to the fact that a loan entry by the bank is rejected or they may even not get the desired rented apartment.

Where does the Private credit information play a role today?

Of course, the Private credit information plays an important role in the financial sector even today. Before banks grant a loan, they almost invariably check the applicant’s Private credit information. Only under the condition that there are no negative entries, such as a dunning letter or an affidavit, the bank goes on at all in the credit check. In addition, however, there are other companies from different industries that consult a Private credit information to assess their creditworthiness.

In practice, the Private credit is therefore of particular importance in the following areas:

  • Apply for loans
  • Mobile phone contract received
  • to rent an apartment
  • make an insurance
  • Payment method at online retailers

In addition to the banks and in particular telecommunications companies that have been using the Private credit information for many years to assess the creditworthiness of their customers, it is of course also insurance companies that often throw a glance in the Private credit. Meanwhile, even more and more landlords are taking advantage of the opportunity to find out about their potential tenants, and online retailers often rely on the information provided by Private credit on whether they are allowed to pay for goods on the bill or only with advance payment.

Incidentally, the Private credit is not the only, but by far the best-known credit bureau in Germany. The essential task of Private credit is to gather information about as many German citizens as possible that are relevant for assessing their creditworthiness.

Right to free Private credit information as self-assessment

Every citizen in Germany has the right, according to the General Data Protection Regulation, which entered into force in mid-2018 with its Art. 15, to demand free Private credit information once a year. You should make use of this right, because in practice it can happen that data that is no longer current or even incorrect is stored in your own Private credit information. These mistakes should be corrected as quickly as possible, because after all, they can lead to loans being rejected or, in the worst case, even not getting a lease, even though your credit rating is actually okay.

To request the free Private credit information, all you have to do is go to the Private credit website. Then you can request a copy of your data stored in the Private credit, which is free of charge for you. This free self-assessment first includes your personal information, such as name, current and previous address and your date of birth. But also for the financial history of your person, there is information, for example:

  • current accounts
  • Current loans
  • credit
  • mobile phone subscriptions

Of course, the score value is of particular interest, as banks in particular look to them to be able to assess the creditworthiness of their customers and applicants at a glance. Since 2017, the score has ranged from 0 to 10,000 points and, of course, the better, the more points are scored. Derived from the score is the so-called rating level, which ranges from A (best creditworthiness) to P (creditworthy) at the Private credit. It is equivalent to the letter with the so-called probability of fulfillment, which states how likely it is that you will fulfill your obligations (for example to banks).

Can I improve my Private credit score?

Assuming that all the data stored about you in the Private credit is correct, but you still want to optimize your Private credit score, there are several possibilities. After all, this will improve your chance not only to obtain credit from banks, but also to be able to conclude mobile phone contracts or to submit a rental agreement.

Credit score

Credit score

In particular, to help you improve your Private credit score, you should follow these rules:

  • Always pay loan installments properly
  • Discretionary credit
  • Have as little checking accounts and credit cards as possible
  • Pay all bills on time
  • Do not risk reminders, for example, not only because of a penalty of 20 euros, which you do not want to pay on principle

What else is important besides the Private credit?

Of course, the Private credit information is not the only feature that banks look for when they want to assess the creditworthiness of their customers. In addition, the income is at least as important, because after all, the agreed loan is later paid out of the income. Some credit institutions only look at income, and other banks also require regular expenditure, which makes sense. There are clearer differences in the income assessment, because for most banks, income is not equal to income. For example, it often makes a big difference whether you earn income from dependent employment or are self-employed or self-employed. Ideally you work for several years with the same employer and of course you are already out of the probationary period.

In the overview, there are in particular the following features, which are rated particularly positively in the context of their income from the banks:

  • Positive balance of revenue and expenditure
  • Dependent employment as an employee
  • Several years since the same employer
  • Permanent employment contract (without probationary period)

Self-employed and freelancers can sometimes be a bit more difficult, as they regard many banks as more risky. Whether this actually applies in practice can not be assessed on a flat-rate basis, but always depends on the individual case. Of course, a self-employed craftsman who has been self-employed for 20 years, for example, can have a much safer job than a full-time office worker who has been with the company for three years. Ultimately, it is up to the bank to judge how the income and hence the total creditworthiness of the client are assessed.

What to do for wrong or incorrect Private credit entries?

Earlier we mentioned briefly that you should use the possibility of a free Private credit information only because you can thereby detect any errors and obsolete entries. But what must you do if you find such an incorrect entry in your Private credit statement? First of all, you have to be sure that the data is actually incorrect. If so, you must contact the initiator of the entry. For a loan, of course, this is primarily the lender, the bank from which you received or allegedly received the loan. In most cases, the Private credit can tell you who is the initiator of the entry, but it does not have the authority to correct erroneous entries from its side. Therefore, you must always go over the initiator and ask him to correct the obviously false entry. If, on the other hand, Private credit blames itself, for example by confusing data, it is of course required to correct the entry.