This isn’t entirely accurate. The Germanic peoples of Europe and Scandinavia were quite literate, dating back to circa 800 at least, just not in the sense that we think of.
No, they didn’t have books, but that doesn’t mean they weren’t literate. Rune sticks and rune stones were relatively common and common ways of memorializing people and communicating notes.
The Icelandics are particularly renowned for their literature in the form of sagas, which were penned mostly in the 13th and 14th centuries. Njal’s Saga is considered the grandfather of the modern novel. Iceland’s unique political structure has led to speculation that the sagas were shared at least among the aristocracy if not also to the “common people” as a means of creating norms and cohesion.