Schufa inquiries by German banks are essential not only for ordinary loans, but also especially for construction financing. If the Schufa is "normal", there will be no problems with the financing. However, the situation is different if the Schufa is negative. While this doesn't mean financing becomes impossible, it can lead to higher requirements from the bank. So how does the Schufa affect the construction financing?
- A negative Schufa does not necessarily mean the rejection of a construction loan.
- The Schufa scoring for construction financing differs from the conventional Schufa scoring.
- A worse Schufa score usually means an interest rate surcharge.
- An increase in the equity ratio required by the bank can be made possible by an employer loan.
Where does a negative Schufa come from?
For many consumers, Schufa represents a data-collecting mystery that should be avoided wherever possible. However, it does not go. As soon as a consumer enters into a contract with ongoing payments, whether for a cell phone or a loan, a Schufa inquiry and a Schufa report are made.
If payment defaults occur during the term of the contract, they are reported to Schufa and worsen the customer's score. Based on personal data, the scoring indicates the probability of repaying a loan, for example. Unlike banks, Schufa scoring does not factor in socioeconomic data, such as where you live in a structurally weak region.
An unpaid telephone bill or a delayed credit installment have no effect on a construction financing. However, the entry remains in Schufa for three years. However, the situation is different in the event of a dunning notice or a warrant for non-payment. The latter makes it completely impossible to take out a loan.
In principle, before applying for a loan, every consumer should make use of his right to a self-disclosure, which can be sent free of charge once a year. This gives them the opportunity to have any outdated or erroneous entries deleted.
Construction financing – the special scoring of Schufa
In contrast to the classic Schufa scoring, which reflects the credit default probability in percent, Schufa uses different standards when assessing a construction financing request. The classification of the creditworthiness is done in classes from A to L. A is the best score, L the weakest score.
The mortgage score indicates the probability of proper repayment of the loan for a period of 15 months from the date of loan disbursement. In this context, it is important to note that the mortgage scoring may have a different value than the scoring for the repayment of a small loan and may well be better.
The consequences of a weak Schufa score for construction financing
- The bank sets a higher interest rate than for comparable financing for a borrower with a "normal" credit rating (Schufa). However, it is not possible to make a blanket statement by how many percentage points the interest rate will rise.
- The credit institutions require a higher equity ratio than the traditional 20 percent.
On the one hand, the second point means a lower interest burden for the borrower due to the higher equity ratio; on the other hand, it becomes critical if equity is tight.
Banks value employer loans in connection with construction financing as equity capital. However, it is important that the loan agreement meets certain legal formalities so that the loan is not classified as a salary payment and thus subject to tax and social security contributions. It is advisable to consult a tax advisor.
In principle, a weak Schufa represents a smaller obstacle in a construction financing than in a classic installment loan. One point is certainly the collateralization of the loan by the land charge, which gives the bank the possibility, in case of doubt, to liquidate the property to smooth the loan.