A credit check assesses a person’s ability and willingness to pay and is used in connection with loans, leases, credit cards, rental agreements, and other contracts. A credit check is a fundamental component of a loan-based contract and is required by Swiss credit law.

When assessing creditworthiness, a distinction is made between credit ability (solvency) and creditworthiness. In particular, income, existing debts, payment history, rejected loan applications, and debt collection proceedings are evaluated.

A positive credit rating leads to favorable terms, while a negative one results in higher interest rates or rejection. Creditworthiness can be improved, for example, by waiting for ZEK entries to expire or by correcting incorrect entries. You can check your own creditworthiness by requesting a self-disclosure report from the relevant credit bureaus.

When does a credit check take place?

A credit check is always carried out when companies advance money, goods, or services and are unsure whether customers can pay their bills. A credit check is widespread for the following contracts.

Lending: Credit institutions and banks conduct credit checks to assess the risk of loan default. Both personal loans and business financing require a credit check.
Leasing contracts: Credit checks are conducted in leasing transactions to assess the lessee’s ability and willingness to pay.
Credit cards: Credit card companies check creditworthiness to determine the credit limit and decide whether to issue a credit card to the applicant.
Online purchases on account: Online retailers can check a customer’s creditworthiness before offering them the option to purchase goods or services on account.
Renting contracts: Landlords conduct credit checks to ensure that potential tenants are able to pay the rent.
Mobile phone contracts: Mobile phone providers conduct credit checks, especially if the contract includes a subsidized cell phone or other hardware.
Insurance policies: Insurance companies conduct credit checks to determine risk and premium amounts, especially for life insurance policies.

Is a credit check mandatory?

Credit checks are mandatory if the contract falls under the Swiss Consumer Credit Act (FLCC). To ensure protection against over-indebtedness in the case of loans, a credit check is essential, following the legal basis for loans. A credit check is also a requirement for leasing contracts or the opening of credit card accounts.

The law provides for specific exceptions where a credit check is not mandatory. The legal obligation to carry out a credit check does not apply to credit agreements of less than CHF 500 or more than CHF 80,000. Also exempt are loans covered by houses or other customary bank collateral, interest-free and fee-free loans, and short-term loans that must be repaid within three months.

What is the procedure for a credit check?

The credit check process can be divided into two areas: the check for the ability to repay (solvency) and the check for the willingness to repay (creditworthiness). Solvency and creditworthiness together reflect the credit rating of natural persons.

How is solvency assessed?

Solvency is assessed based on statutory regulations. Borrowers must be of legal age and able to repay the loan plus interest within a period of 36 months. The maximum credit limit is determined according to this criterion. The decisive factor for the assessment is disposable income, which corresponds to the part of the income that cannot be seized per the Debt Enforcement and Bankruptcy Act and the cantonal provisions. Put simply, the maximum monthly loan repayment amount, including interest, may not exceed the freely disposable income.

The disposable income is calculated from the net salary minus the legally defined minimum subsistence level (approx. CHF 1,200 per month for a person living alone, depending on the canton).

How is creditworthiness assessed?

Creditworthiness is assessed based on financial trustworthiness and indicates the likelihood that individuals will or will not pay their bills. The assessment is based on past payment history, outstanding debts, and negative or positive anomalies. Statistically relevant factors such as age and nationality also play a role.

Credit rating databases such as the Central Office for Credit Information (ZEK) and other credit bureaus provide the information that influences creditworthiness. In Switzerland, there are several relevant databases in addition to the ZEK: IKO, CRIF, Intrum, Dun & Bradstreet, Creditreform, and the Debt Collection Register. Current loans, past debt collection cases, pending loan applications, and much more are stored here. Which data is taken into account varies depending on the lender. Credit bureaus must comply with the Data Protection Act, which means that only individuals who can demonstrate a legitimate interest are permitted access to the data.

What is taken into account in a credit check?

A credit check takes into account all factors that are financially relevant from a statistical point of view.

The 5 most important credit-rating factors are the following.

Income
Existing debts
Payment history
Rejected credit applications
Debt collection

1. Income

Income is a decisive factor in the credit check. Not only is the amount of income taken into account, but so is its regularity and source. For example, self-employed people are less creditworthy than employees in the same income bracket because the risk of default is higher.

2. Existing debts

Existing debts are incorporated in the check, including loans, leasing contracts, credit card liabilities, and other financial obligations. It is worth reducing existing credit debts before a credit check. A high level of debt harms creditworthiness as it restricts the financial resources available for paying off new debts.

3. Payment behavior

Previous payment behavior is analyzed via the payment history. Regular and punctual payments in the past strengthen creditworthiness, while late payments and reminders are seen as negative signals.

4. Rejected credit applications

All rejected or granted credit applications are noted in the credit agencies and influence the credit rating. Several rejected applications in a short period indicate financial difficulties and reduce the chances of obtaining a new loan.

5. Debt collection

Debt collection is a serious negative factor in the credit check and significantly damages creditworthiness. Special attention is paid to the debt collection register when checking creditworthiness. It is very difficult to obtain a loan despite debt collection, as this indicates severe problems in meeting financial obligations.

What effect does a credit check have?

The credit check has far-reaching effects, as it plays a fundamental role in the decision to grant loans, lease contracts, and other financial services.

A positive rating paves the way to favorable conditions, high credit limits, and the approval of financing applications.

A negative rating makes it more difficult to obtain credit. The consequences of a poor credit rating are higher interest rates, lower credit limits, or the need for additional collateral. In profound cases, a poor credit rating leads to loan applications being rejected altogether.

How can you improve your credit rating?

There are many ways to improve your credit rating. Long-term options include increasing your income, reducing monthly expenses, building up wealth, and avoiding unnecessary debt.

Improving your credit rating in the short to medium term is possible with the following measures.

Wait for the ZEK entries to expire
Have ZEK entries corrected
Use loan brokers
Use credit cards

1. Wait for the ZEK entries to expire

After a certain waiting period, ZEK entries become less critical, and creditworthiness improves again. For example, if you have been refused 3 loans, you must wait at least 3 months without inquiring so that the previous ZEK entries are ignored. Debt collection measures and/or debt enforcement remain noted in the ZEK for 5 years.

2. Having ZEK entries corrected

Cleaning up ZEK entries is possible to a limited extent, but it can be very helpful in certain circumstances. If the ZEK has registered incorrect or unauthorized entries, you can have them corrected. In principle, only the institutions that initiated the entry may delete the entry prematurely. However, there are services to get rid of as much harmful data as possible.

3. Using loan brokers

Choosing the right provider will increase your chances of getting a loan if your credit rating is not too good. Choosing a lender is a major challenge for non-experts, which is why you can request a list of personal loan brokers from Kredite Schweiz to improve your chances of success.

4. Using credit cards

Using credit cards is a good way to improve your credit rating. The payment history is listed with credit agencies, as credit cards in Switzerland are considered loans. Responsible use and regular, punctual payment of bills can, therefore, improve your credit rating. According to NerdWallet, credit cards are one of the most effective ways to improve your credit score. In Switzerland, credit card use has less impact but still sends good signals.

How can you self-check your own credit rating?

You can self-check your own credit rating by requesting a self-disclosure report from the relevant credit bureaus. Under the revised Data Protection Act (nFADP), which has been in effect since September 1, 2023, every person in Switzerland has the right to know what data is stored about them. The report must be provided within 30 days and must contain all processed data in an understandable format. If you want to check your creditworthiness yourself, you always need a copy of your ID for data protection reasons.

Each credit bureau stores different data. To get a complete picture of your creditworthiness, you should request a self-disclosure report from all agencies that are relevant to you. To get a rough idea of your creditworthiness, one or two credit bureaus are sufficient, such as ZEK and CRIF.

The most important credit agencies for requesting a self-disclosure are the following.

ZEK and IKO
CRIF AG
Intrum AG
Creditreform
Dun & Bradstreet
Debt Collection Register

The ZEK (Central Credit Information Bureau) is the central database for credit, leasing, and credit card information in Switzerland. It stores all current and past credit agreements, rejected applications, and credit codes (credit information). Closely linked to the ZEK is the IKO (Information Center for Consumer Credit), the legally mandated reporting agency for consumer loans and leasing agreements involving natural persons. The IKO is administratively operated by the ZEK but maintains a separate database and stores data only for the duration of a loan. Information from both databases can be requested directly through the ZEK self-disclosure service. Processing takes two to three business days.

CRIF is one of the largest private credit bureaus in Switzerland and provides creditworthiness data to banks, insurance companies, online retailers, and landlords. The CRIF self-disclosure report can be requested via email on the website.

Intrum is best known as a debt collection service provider, but it also operates its own credit database containing information on payment history and outstanding debts. The Intrum self-disclosure report can be requested on the website.

Creditreform collects credit data on individuals and businesses and is particularly prevalent among small and medium-sized enterprises as well as in the rental sector. You can request a Creditreform self-disclosure report on their website.

Dun & Bradstreet focuses primarily on corporate creditworthiness but also processes data on individuals, particularly the self-employed and owners of sole proprietorships. You can request a D&B self-disclosure report on their website.

Strictly speaking, the Debt Collection Register is not a credit bureau, but it is at least as important for your own creditworthiness. The extract can be ordered from the debt collection office at your place of residence and costs around 15 to 30 francs.

How does a credit check work in Switzerland?

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