Your credit score is a number that represents your creditworthiness. The score depends on the information on your credit report, such as your credit history and the amount of credit you’re currently using (known as your debt-to-credit ratio).
In the United States, lenders, landlords, employers, insurers, cell phone companies, and other businesses may look at your credit score before deciding whether to enter into a contract with you.
You need a credit score to take basic financial steps throughout your life, such as buying a home or a car. Understanding how credit works and the benefits of having good credit is an integral part of financial literacy in America.
If you’re interested in traveling or living abroad, you might be wondering whether your credit score is important in other countries. For that matter, do other countries use credit scores at all? Here’s a closer look at how credit scoring works throughout the world.
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Credit scores in North America
The United States and Canada have similar credit scoring systems. However, they have a few minor differences in terms of their scoring ranges and dominant credit reporting agencies.
The United States
To give you some context on credit reporting in other countries, it’s worth clarifying how credit reports and scores work in the US.
Lenders look at reports from one of three major credit bureaus:
- Equifax
- Experian
- TransUnion
Most companies will check your credit with just one bureau (and the one they pick is up to them). They’ll look at both your credit score and the information in your credit report before deciding whether to lend you money.
Credit scoring models in the US
The most common credit scoring models are produced by the Fair Isaac Corporation (FICO). There’s a good chance that at some point you’ve checked your FICO score, which was created using one of their models, such as FICO 8 and FICO 9. 1
FICO’s main rival is VantageScore, which is a credit scoring company that was founded in 2006 by the three main credit bureaus to provide an alternative to FICO. 2
In the US, every major scoring model considers the following variables when calculating your credit score:
- Payment history: A record of your payments on all of your loans and credit accounts, which indicates whether you usually pay your bills on time or you have a record of making late payments.
- Credit utilization: The amount of credit you’re currently using compared to the total amount of credit you have available. A lower credit utilization ratio is better.
- Length of credit history: How long you’ve been using credit. The scoring models reward a longer credit history.
- New credit: The number of new credit accounts you’ve opened or applied for recently. Applying for credit usually triggers a credit check (known as a hard inquiry), which temporarily lowers your score.
- Credit mix: The variety of credit accounts that you have (e.g., credit cards, mortgages, auto loans, etc). A diverse array of accounts benefits your score.
Lenders will only consider your credit scores with the American credit bureaus in the US. In other words, if you travel or move abroad, your credit score and credit history won’t cross the border with you. 3
Canada
The credit score system in Canada is similar to the one used in the United States. For instance, both countries use the same factors to calculate credit scores.
However, there are slight differences between the American and Canadian systems:
- Credit score range: The credit scores in Canada typically range from 300 to 900, whereas standard credit scores in the US usually only range from 300 to 850. 4 5
- Credit bureaus: Canada has only two major credit reporting bureaus (TransUnion and Equifax). Experian, the third major credit bureau in the US, shut down its Canadian operations in 2009. 6
Credit scores in South America
While some South American countries, such as Brazil, have credit reporting systems, they aren’t as developed as those in North America.
According to Nathan Lustig, managing partner at Magma Partners, the lack of financial information in many South American countries leads to very high interest rates because lenders have to assume that every consumer has a high risk of not repaying their debts as agreed.
Brazil
Brazil has a debt reporting system that includes both negative and positive information, but it only focuses on past debts and repayments, not other factors (such as credit utilization).
Brazil has four credit bureaus: 7
- Serviço de Proteção ao Crédito (SPC)
- Serasa
- Boa Vista
- Quod
What Brazil calls “positive credit reports” have only been in existence since 2013. 8 These reports contain information on payments toward debts (such as loans and credit card debts) and utility bills.
Unlike in the US, if you’re living in Brazil, you can choose to have this information deleted from your credit report—all you need to do is notify the credit bureaus and they have to delete the relevant information from your credit report within a few days. 8
Chile
Chile has a credit system that’s rapidly growing and evolving. They have four main credit bureaus, although they aren’t independent entities—they’re run by the US bureaus. 9 10 11 12
Chile’s main credit reporting agencies are:
- Databusiness SA (a subsidiary of TransUnion)
- Sinacofi Buró (owned by Experian since 2021)
- SIISA (run by Equifax)
- DICOM (also Equifax)
If you’re planning to move to Chile and you’re thinking about opening a credit account, be warned of the high interest rates and predatory practices of some credit card companies, which can quickly get you into more debt than you can pay off and damage your credit score with the bureaus mentioned above. 13
Credit scores in Europe
Europe does not have a universal credit reporting system. European lenders will usually look at evidence other than your credit score to assess your creditworthiness.
For example, you may have to provide information about your employment, current salary, existing loans, and residency status. Some lenders may also inquire about your living situation and family members who live with you.
European Union
Countries in the EU are fairly diverse when it comes to credit scoring. Some countries have credit bureaus that operate much like the companies in the US, whereas others don’t use credit scores at all.
Per one of the EU’s directives, lenders and creditors in European Union member states have a list of individuals who have defaulted on past debts. Most lenders will check your name against this index when you apply for credit. This applies only to your records in EU countries.
Russia
Russia’s credit scoring system has some similarities to the credit score system in the United States.
There are four main credit bureaus in Russia: 14
- LLC Equifax Credit Services
- JSC National Bureau of Credit Histories (NBKI)
- CJSC United Credit Bureau
- LLC Russian Standard Credit Bureau.
Lenders use an individual’s credit score to assess their creditworthiness, and the leading credit bureau in Russia (NBKI) even uses FICO scores. 15 Consumers can access their credit reports for free twice each year through the Bank of Russia. 16
Credit scores in Asia
The credit industry in Asia is very diverse. If you’re thinking about relocating to an Asian country, it’s worth researching how the credit system works there. Bear in mind that in some countries, banks may be unwilling to extend credit to non-citizens.
China
China’s credit system differs from those of most other counties in that they produce “social credit scores” that incorporate many personal factors in addition to an individual’s credit account history. 17
While late payments and defaults will hurt your credit score in the People’s Republic of China, lenders can also look at your driving records and information about fines for minor infractions, such as smoking in a non-smoking zone. A poor credit score can make obtaining credit difficult, and can also affect your ability to find employment, gain admission to schools, and even purchase airline tickets.
Credit scores in other regions
Here’s a quick look at how credit works in some other major countries across the world.
South Africa
The credit score calculation method in South Africa is very similar to the US’s system.
There are four major credit bureaus in South Africa: 18
- Experian
- TransUnion
- Compuscan
- XDS
The bureaus calculate credit scores using the same factors that go into scores in America. However, each of these bureaus has its own credit score range.
For example, in South Africa, TransUnion’s consumer credit score range is 0 to 999, with a score of 526 or below being considered unfavorable and scores of 681 or higher qualifying you for the best interest rates. 19
Though your score will play a major role in the outcome of your loan application in South Africa, lenders will also look at your employment situation and existing financial obligations when assessing your creditworthiness.
Australia
Australia has three major credit bureaus: 20
- Experian
- Illion
- Equifax
In the past, consumer credit reports in Australia only showed defaults, and the credit score system was based on negative information. Now, the country’s system is similar to America’s, meaning positive information also influences credit scores.
Australian credit reports include data such as late payments. However, they also have two years of positive info, such as on-time payments and reductions in existing debt. This combination of positive and negative information is important because it gives consumers the opportunity to actively improve their credit rather than simply trying to avoid penalties for incurring black marks on their credit reports.
