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I read that if you use your credit cards, you build credit. I also read that if you get credit cards, your creditworthiness suffers. Both of these seem to make sense. Doing the former means that you show that you will pay debt back. It also makes sense to me that each person has some total amount of money they can be trusted to pay back at a fixed risk and if that person can use up more of that amount by simply using their credit cards, there is less left of other loans.

However, when I actually got a copy of the personal information stored by Schufa (I live in Germany), they neither gave me any information on how much I use my credit cards nor what the credit limits of my credit cards are. As I understand the GDPR, they need to give me all information they have about me and how big of a loan I'm trusted by what credit card company certainly sounds like information about me.

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  • I don't know how it works in Germany, but in the U.S., it works the exact opposite. The best thing for your credit score is to have lots of credit (by having many credit cards or at least one card with a high limit) and low utilization. Although there is a small temporary hit to your credit when you get a new card. – Daniel Feb 26 '20 at 18:19
  • Does "utilization" refer to all usage of the card or only to carrying debt over to the next month? If I spend 1000 dollars on something and pay right when the bill arrives, it seems to me that I've just shown that I will pay 1000 dollars back without any problems. But of course if it takes me 2 months to pay the 1000 dollars back, I've shown that I'm not the fastest when it comes to clearing debt. – UTF-8 Feb 26 '20 at 18:35
  • In my experience, the banks report your credit balance to the bureaus right around the time they send your bill. So if you pay off your balance online before your bill is generated they might report $0 utilization, but if you wait until after you receive your bill the balance will still be reported even if you pay it before it's due and never pay a dollar of interest. – Daniel Feb 26 '20 at 18:38
  • They also separately report late payments, so that information is on your report separately. – Daniel Feb 26 '20 at 18:39
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    The Schufa algorithm is black box, but we know that it works fundamentally differently from the American credit score system. Opening new lines of credit or failing to pay your debts is probably bad, so it makes no sense to open multiple credit cards – needing credit is not a sign of reliability. But banks don't stream utilisation data to Schufa, so whether and how you use your cards is not so relevant. Managing the Schufa score is primarily about purging incorrect negative marks, you can't "build credit". – amon Feb 27 '20 at 7:29
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I've worked with Schufa for some years and found this post via search subscription I still have at google ;)

Schufa does not know of any balances or transactions, neither in accounts, nor credit cards. And they only have rudimentary data about loans you have at banks or other lenders who contribute to their database, that is e.g. principal amount, number of instalments, date of disbursement. Even for loans in their records they have only "negative" data in case you do not repay an instalment with considerable delay. For data protection reasons, there are significant limitations for companies to put negative information into your record, and the checks at Schufa are strict.

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