Many countries don't use credit scores like the US — here's how they determine your worth (2024)

Table of Contents

1. Japan 2. United Kingdom 3. The Netherlands 4. Canada 5. Spain 6. Brazil 7. France 8. Germany 9. Australia 10. China FAQs References

Personal Finance

Written by Christopher Curley

2018-08-20T17:05:24Z

Many countries don't use credit scores like the US — here's how they determine your worth (1)

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Acredit score is a number, used in countries like the US and Canada, which aims to predict your likelihood to meeting financial obligations like paying back a loan.
Having a low credit score can make it harder and more expensive to get a mortgage, for example.
Mant countries do not have a credit score system like the US, instead only tracking negative credit marks rather than tracking positive ones.

In the US, a good credit score can feel like a key determinant of success. It defines how good an interest rate you can get on a car loan or mortgage, the quality of credit card you can get approved for, or if you'll get approved for any credit at all.

The better your score, the better the perks. A bad score can become a black mark that leads to missing out on the home you want (credit checks are a common aspect of apartment applications), higher car insurance rates, or even difficulty getting a cell phone, according to Nerdwallet.

But as monolithic as the credit score seems, many countries in the world handle credit very differently — with many having no credit score system at all.

Here's how 10 countries deal with credit, and how they score your financial worth.

1. Japan

Many countries don't use credit scores like the US — here's how they determine your worth (2)

Japan "doesn't have an official credit scoring system," according to Matthew Hague, a certified financial planner who lived in Japan and now often works with American expats in Japan. Your U.S. credit won’t matter unless you bank with an international bank that has an existing relationship with a counterpart in Japan, he told Business Insider.

Credit in Japan is usually between the consumer and the bank, and is based on factors like length of employment and salary.

"Some banks are OK lending to foreigners; some are not," Hague explains. "More traditional banks wouldn't even bother delocalizing their websites. If you can't read Japanese or fill out the forms in Japanese, you can't get credit."

2. United Kingdom

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Travel to the United Kingdom, and there's a credit system much like the credit scoring system in the US. The UK has three major credit agencies, Equifax, Experian, and Callcredit (Noddle), according to The Telegraph.

Each agency scores you differently. Experian uses a 0-999 point scale (you'll get the best rates from having a score of 961-999), Equifax issues a score within the range of 0-700 (466-700 is ideal), and Callcredit provides a score of one to five, with five as "excellent" credit.

Similar to the US, UK consumer credit is based on factors like your payment history, age of accounts, and credit utilization, UK debt solution provider Harrington Brooks reported.

But the system has its differences, too: Getting on the electoral register to vote (or explaining why you're not eligible to) can help you improve your credit in the country, according to Experian UK.

3. The Netherlands

Many countries don't use credit scores like the US — here's how they determine your worth (4)

In The Netherlands, a person with a steady income who isn't defaulting on any existing debts (like missed bill payments) is generally likely to be judged creditworthy.

Unpaid debts are registered to the Bureau Krediet Registratie (BKR), the governing credit registry bureau, finance consultant Peter Gibney told Just Landed.

If you do end up with a negative mark, you could have it for the long haul. Negative marks on the BKR disappear five years after the initial debt is discharged, according to the BKR.

4. Canada

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Canada's credit system is the most like the US system. TransUnion Canada and Equifax Canada are the northern brethren of two of the US's three major credit agencies, TransUnion and Equifax, according to the companies' respective websites.

And just like the US, credit in Canada is judged by factors like payment history, credit utilization, recent account history, and age of accounts, according to CBC News.

The major difference is that Canadian credit scores range from 300 points to 900 points, with most people needing a minimum score of 680 to get a good interest rate on a loan.

5. Spain

Many countries don't use credit scores like the US — here's how they determine your worth (6)

Spain has a credit register that tracks "virtually all the loans, credits, bank endorsements and risks in general that financial institutions have with their customers," according the the Bank of Spain.

But like in The Netherlands, having "good credit" is more about staying off a bad credit blacklist, according to Spanish law firm Velasco Lawyers. Once on a blacklist, consumers remain there until the debt is paid off or six years passes.

6. Brazil

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Brazil formerly had no formal credit scoring system. Lenders generally relied on negative reporting alone, and debts were removed from the credit register as soon as they were paid off, according to the Centre for Latin American Monetary Studies.

But that's changing. Starting in 2012, Brazil's government set rules for the creation of positive credit bureaus, leading to a coalition of the country's five biggest banks to form a credit research agency, the International Financing Review reported.

Other global companies, like Experian and Fair Isaac Corporation (FICO), have also stepped in and established their own systems in Brazil.

7. France

Many countries don't use credit scores like the US — here's how they determine your worth (8)

France has no major credit reporting agency. Instead, to pursue a mortgage, for instance, you'll need three months of bank statements and paperwork to prove your income, as well as proof of marital status (if applicable) and the sale contract, according to the French Property real estate service.

A bank will dig into your financial records and require a healthy 15% (at least) down payment and fees amounting to an additional 7%, French property-buying guide French Entreé reported.

8. Germany

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Germany has a fairly sophisticated credit system.

Its main credit agency is SCHUFA, a private company that operates like the credit data brokers in the US, tracking open accounts, unpaid bills, loans, and fines, according to the Open Knowledge Foundation of Germany.

If you're just coming to Germany for the first time, your SCHUFA score starts when you rent your first apartment, open a bank account, or pay your first utility bill. Everyone starts at 100 and then their score goes down over time as they gain financial history. A score in the 90s is considered a good credit score.

9. Australia

Many countries don't use credit scores like the US — here's how they determine your worth (10)

Australia's system is currently in a transition period.

Previously, research into your financial worth and reliability as a loan recipient was based on a credit report that only showed your negative marks, i.e. loans in default or unpaid bills, the Sydney Morning Herald reported.

In 2017, however, that changed to include two years' worth of positive financial data as well, including regular mortgage and credit card payments, according to the Herald's report. Thus, Australia is inching closer towards an American-style credit reporting system.

10. China

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The People’s Bank Of China (PBOC) gave eight private companies license to implement credit score pilot programs in 2015. However, the bank has been pushing back on the companies’ efforts ever since, due to concerns about private company overreach as well as the government’s plans to develop its own credit scoring system, Business Insider previously reported.

The Chinese government is also in the process of implementing a mandatory "social credit" ranking system. Going far beyond positive credit score behavior, the social credit system peeks into every aspect of a person's life.

Not paying a debt will hurt your score, but so can infractions like a poor driving record or smoking in a non-smoking zone, Business Insider reported. A low score can keep a person from getting into good schools, buying plane and train tickets, and even affects who they match with on online dating sites.

With all these variables in how countries determine your worth, it's worth asking: How badly do we need credit scores, period? Hague, for his part, said he thinks less complicated systems of determining creditworthiness are best.

Lending "should be based on the ability of payments to happen," he said.

Christopher Curley

FAQs

Do other countries use credit scores like the US? ›

What countries have credit scores? Countries around the world including Canada, the U.K., Spain, China, and Japan use credit scoring systems. Not all countries that use credit scores have systems like the U.S. Some only track negative marks like late or missed payments, while others track total debt or debt history.

Get More Info Here ›

What country does not use credit scores? ›

Japan. In Japan, there's no formal nationwide credit system. A person's creditworthiness is typically determined by each bank, based on its relationship with the consumer. Each financial institution will look at factors like salary, length of employment and current debts to determine their level of risk as a borrower.

Read On ›

Do foreign people have credit scores? ›

U.S. credit scores reflect the creditworthiness of U.S. residents. Other countries have their own systems to judge whether borrowers are likely to pay off their debts. Monitor your credit, track your spending and see all of your finances together in a single place.

What is the credit score in Canada vs US? ›

For example, Canadian credit scores range from 300-900 while US credit scores range from 300-850. While both share FICO's common credit score model, the average credit score in Canada is 650, while the US's average score is 704.

Discover More Details ›

Does Canadian debt follow you to the US? ›

Your credit report and credit score don't follow you when you move to another country. But it is important to know that some debts you owe will remain active. Lenders may find it harder to pursue legal action against you when you are in a different country.

What country has the highest credit rating? ›

Some of the top examples include Australia, Canada, Denmark, Germany, Sweden, Switzerland, Norway, and Hong Kong. These are all countries that generally carry a credit rating of AAA.

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Does Mexico use credit scores? ›

Mexico. Mexico's official credit bureau, the Buró de Crédito, tracks consumer credit information. But a private credit bureau, Círculo de Crédito, is gaining popularity among Mexican banks. Círculo de Crédito uses FICO score models to determine creditworthiness.

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Does Russia have credit scores? ›

More than half of the top Russian banks use FICO^® Scores delivered by NBKI. National Bureau of Credit Histories (NBKI) is the largest credit bureau in the Russian Federation. It was created in 2005, and counts among its shareholders major commercial banks and international companies CRIF and TransUnion.

Does Canada use credit scores? ›

Get your credit score

You may access your credit score online from Canada's 2 main credit bureaus. Your credit score from Equifax is accessible online for free and is updated monthly. If you live in Quebec, you may also access your credit score from TransUnion online for free.

Tell Me More ›

Does Africa use credit scores? ›

According to the IFC-World Bank Doing Business 2007 report, only four African countries have effective credit bureaus: Botswana, Namibia, South Africa, and Swaziland. The credit bureaus in Africa have information on only 3.5 percent of the population.

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Is there a credit score in Germany? ›

The Schufa benchmark score provides information on your creditworthiness and is calculated on the same day as your credit report request. The values lie between 100 and 600 and are determined by calculating the weighted average of all Schufa industry scores. The lower the score, the lower your risk of default.

Can I use my U.K. credit score in the USA? ›

In the past, different credit reporting systems and laws made it difficult to share credit information across borders, even when the credit reporting agencies operate in both countries. Today, it's possible to use your U.K. credit history in the U.S.

Learn More ›

What is Canada's average credit score? ›

According to the Fair Isaac Corporation (FICO) blog, the average Canadian FICO score remains at 762. Meanwhile, in its 2022 report, Borrowell states that the average credit score of over 2 million of its Canadian members is 672, compared to 667 in 2021.

Learn More ›

Can I move to Canada if I have debt? ›

If you've spent years working towards a near-perfect credit score, it doesn't matter, you'll have to start from scratch up here. If you have awful credit, the good news is that successfully immigrating to Canada will mean you leave it behind, but it doesn't absolve you of your debts.

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What is the ideal credit score in USA? ›

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Tell Me More ›

Are credit scores different between countries? ›

Your credit score will not follow you to another country, but your financial situation, including your debt levels and income, will still play a pivotal role. Creditors cannot share your financial information abroad and different countries have different standards for assessing creditworthiness.

View Details ›

Does the U.K. use credit scores? ›

In the U.K., each lender has their own separate scoring model depending on their criteria and what they're looking for in a customer. While British lenders can use the scores provided by the credit bureaus, they primarily help educate the consumer about their credit rather than use it to evaluate creditworthiness.

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Are credit scores a thing in France? ›

FRANCE is one of several countries that does not use credit scores in the same way as the US or UK, so it has no central credit bureau or credit-scoring companies.

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