Credit check in Switzerland explained simply

What does creditworthiness actually mean? Simply put, it describes your financial reliability: your willingness and ability to meet your financial obligations in full and on time. In Switzerland, credit checks are an integral part of financial life. For a personal loan, your credit score determines whether you’ll receive financing and on what terms.

But creditworthiness matters beyond just loans. Whether you're applying for a mortgage, signing a leasing contract, subscribing to a mobile phone plan, or renting a flat, your creditworthiness will be assessed. A good credit score opens doors with banks and service providers, while a poor score can lead to higher interest rates, fewer options, or even outright rejection.

In this article, you'll learn what a credit check involves, why it’s so important, and how you can improve your own creditworthiness to gain financial advantages.

What is a credit check and why is it important?

A credit check (also known as a creditworthiness assessment) evaluates two key aspects:

• Your credit capacity: This refers to your financial situation, including your income, budget, and any legal requirements. For instance, Swiss consumer credit law ensures you cannot take on loans that would lead to over-indebtedness.

• Your creditworthiness: This reflects your reputation as a borrower, based on your payment history, existing debts, and any negative entries in the debt collection register.

Credit checks protect both sides: Lenders gain assurance that you can repay the loan without defaulting, while you are safeguarded from potential over-indebtedness.

For personal loans, your credit score is crucial. It not only influences whether you qualify for a loan but also affects the terms. A higher score increases your chances of approval and typically results in lower interest rates.

However, failing a credit check means no loan approval. A loan rejection remains visible to other banks for about two years, making future applications more difficult and costly.

A poor credit score can also lead to financial obstacles in daily life. Renting a flat, applying for a mobile phone plan, or leasing a vehicle may become challenging if your creditworthiness is viewed negatively.

Credit check in Switzerland – step by step explained

How does a credit check actually work? In Switzerland, banks and financial institutions typically follow these steps to assess your creditworthiness:

1. Collecting personal and financial data

When applying for a loan or financing, you must disclose relevant information. This includes personal details, as well as financial information such as your income, employer, expenses, and existing obligations. With this information, the bank creates a budget calculation: your income is compared to your expenses to ensure that sufficient funds remain for loan repayments. At the same time, the bank also checks for legal compliance.

2. Obtaining credit reports

Next, the lender checks your creditworthiness through external sources. In Switzerland, banks use various sources:

• The central credit information office (ZEK), where all loan applications and credit contracts are registered;

• The debt collection register;

• Credit reporting services such as CRIF, Intrum Justitia, Dun & Bradstreet, or Creditreform.

These services provide information about past payment arrears, debt collections, ongoing loans, and your general payment behaviour. Factors such as frequent moves or job changes can also influence the evaluation.

It’s important to note that every credit inquiry is recorded by ZEK, even if you’re only requesting offers. These inquiries remain visible in the database for as long as they are valid, so be cautious with credit inquiries.

3. Evaluation by banks and financial institutions

In this step, the financial institution compiles all the gathered data. Each bank uses its own scoring and rating system. Based on your profile — including your financial situation, employment, available collateral, and results from ZEK and other credit reporting services — the bank calculates your personal credit rating. This rating determines both your loan approval and the terms:

• With a high rating (good credit), you are seen as a reliable customer and are likely to receive the loan at favourable interest rates.

• A low rating (poor credit) can lead to rejection or a smaller loan amount, as well as higher interest rates.

At the end of the process, you’ll either receive an approval with the corresponding contract terms or a rejection. If rejected, you are usually not provided with a detailed explanation, only a note that the internal credit policy does not permit lending.

Tips for improving your credit score

A poor credit score is not a permanent sentence. You can actively improve your creditworthiness over time. With these practical tips, you can effectively boost your credit score in Switzerland:

• Pay your bills on time: Your payment behaviour significantly impacts your credit score. Even a forgotten bill can lead to reminders and, in the worst case, a debt collection entry, which can severely damage your creditworthiness. Build a positive payment history. Use standing orders or eBill for regular payments to ensure they occur automatically and on time.

• Reduce your debts: Gradually pay off existing debts and keep your overall level of indebtedness low. A lower debt ratio improves your financial situation and, in turn, your credit score. Avoid maxing out your credit cards and aim to pay off the balance in full. Avoid taking on too many parallel loans or financial obligations. Repay existing loans on time before taking on new ones.

• Check your own credit score regularly: Get a clear picture of your current credit status. Request a regular credit report from ZEK or major reporting agencies like CRIF or Intrum Justitia. This credit report shows what entries are recorded about you, both positive and negative. Carefully review this data and have any incorrect or outdated entries corrected promptly.

Common mistakes during a credit check and how to avoid them

When it comes to your credit score, you might unknowingly make mistakes. To avoid sabotaging your own creditworthiness, here are the most common pitfalls during a credit check and how to avoid them:

Mistake 1: Providing false or incomplete information

If you provide inaccurate information on loan or leasing applications, you harm yourself. Incomplete income data, hidden debts, or incorrect addresses will be uncovered when the lender checks your credit report. Such inconsistencies typically lead to rejection and may result in a negative entry.

How to avoid this mistake: Complete application forms truthfully and fully. Disclose your income, expenses, and obligations. Submit requested documents (e.g., pay slips, ID, bank statements) promptly. Honesty and transparency build trust with the bank. If you’re unsure about what information is needed, ask for clarification rather than leaving something out.

Mistake 2: Neglecting your credit score

Many people only think about their credit score when they need a loan, and are then surprised by the results. Without regular checks, faulty entries or old debt collection entries may go unnoticed, negatively affecting your creditworthiness.

How to avoid this mistake: Take control of your credit score before it becomes urgent. Regularly request your credit report from ZEK or a credit reporting agency (usually for a small fee) and review your data. If you find any discrepancies, such as an incorrectly recorded debt that you’ve already paid off, contact the relevant agency and have the entry corrected. By proactively reviewing your credit, you can resolve issues before lenders discover them, avoiding unnecessary rejections.

Mistake 3: Taking payment obligations lightly

Late or missed payments are a common cause of poor credit scores. Reminders and debt collection often result from negligence, such as misplaced or forgotten bills. Every debt collection, even for small amounts, is recorded and severely impacts your credit score.

How to avoid this mistake: Create an organised payment plan. Use calendar reminders, direct debits, or standing orders to ensure no bills are overlooked. If you’re facing financial difficulties and cannot make a payment on time, contact your creditors early. Often, you can arrange an instalment plan or deferment before it escalates into debt collection.

Mistake 4: Making too many credit inquiries at once

Applying for personal loans at several banks or credit brokers simultaneously harms your credit score. Every credit inquiry is recorded by ZEK. Multiple parallel inquiries appear negative to banks, as they may suggest you are desperately searching for credit or have already been rejected. Simultaneous applications at different institutions can significantly lower your chances and may lead to consecutive rejections.

How to avoid this mistake: Be strategic. Submit your loan inquiries one at a time, starting with the provider most likely to approve your application. Alternatively, you can hire a reputable credit broker who collects your information once and finds the best offer for you, avoiding multiple inquiries to ZEK.

In general, caution, honesty, and proactive planning are the best ways to avoid errors during the credit check process.

Conclusion: Good credit gives you financial flexibility

Your credit score affects almost every financial decision in Switzerland – from small loans to credit cards and even large mortgages. That’s why it’s crucial to regularly monitor your credit score and actively work to improve it.

A good credit score gives you financial flexibility: you’ll have easier access to loans and other financial products, enjoy more attractive terms like lower interest rates and higher credit limits, and appear more confident as a business partner.

With a clean payment history, controlled debt, and regularly reviewed credit reports, you lay the foundation for future ventures — whether it’s financing a new car, purchasing a home, or securing special solutions like a securities-backed Lombard loan.

To sum up, creditworthiness is not a static value but something you can positively influence with the right behaviour.