Some credit scoring systems are similar to the model used in the U.S., but other countries may have different methods for calculating creditworthiness. And what’s considered a good credit score in the U.S. might not be a good score in a different country.
Keep in mind that some countries don’t use credit scores and reports. So if you move abroad, you may need to build credit from scratch. But before you learn how credit works around the globe, it may help to review some U.S. credit score basics.
How credit works in the U.S.
U.S. credit scores are three-digit numbers that help measure a person’s creditworthiness—or how likely they are to repay their debts.
The U.S. has three major credit bureaus—Equifax®, Experian® and TransUnion®. Each bureau collects information about a consumer’s financial habits, such as payment history and outstanding debts, and uses it to create credit reports.
Credit scoring companies—like FICO® and VantageScore®—pull information from a person’s report and use a credit scoring model to calculate their credit score. These credit score ranges typically start at 300 and go up to 850.
Higher scores might help borrowers get better loan terms and interest rates. But lower scores could make it harder—and more expensive—to borrow money.
Australia
Australia currently has four major credit bureaus—Equifax, Experian, Dun & Bradstreet® and the Tasmanian Collection Agency®. Australian credit reports may include information about a consumer’s:
- Payment history
- Recent credit applications
- Outstanding debts
- Delinquent accounts
This information is used to calculate credit scores. Depending on the scoring model, Australian credit scores can range from 0 to 1,000, or up to 1,200. Like the Canadian and American systems, Australian lenders may consider those with high credit scores to be more creditworthy than those with low scores.
Canada
Canada and the U.S. have similar credit scoring systems. But Canadian credit scores can range from 300 to 900.
Canada has two major credit bureaus—Equifax and TransUnion. These bureaus collect similar details to those found in U.S. credit reports, such as:
- Payment history
- Outstanding debts
- Credit mix
- Credit history
- Newly opened, or closed, accounts
Like the American system, Canadian lenders may extend better loan terms and interest rates to borrowers with higher credit scores.
China
China uses a social credit system to determine whether an individual is creditworthy. This system also tracks nonfinancial factors, such as traffic violations and arrest records.
A low social credit score could prevent someone from being approved for a credit card or loan. It may also lead to travel bans or job restrictions.
France
The Bank of France is the only financial institution that tracks consumer credit activity. But it typically limits records to negative information—like missed payments or delinquent accounts.
French lenders typically base creditworthiness on a person’s income. So you may be required to submit proof of income when you apply for a line of credit.
Certain laws may prohibit French financial institutions from sharing consumer information with one another. So the lending process could vary on a bank-by-bank basis.
Germany
Germany gives each person a starting credit score of 100. The country’s credit reporting agency, SCHUFA, collects data about consumer credit behavior, which may include:
- Missed and late payments
- Court records
- Credit account balances
A SCHUFA score above 90 is typically considered a good credit score. But every time a person takes out a loan or misses a payment, their score may drop.
Japan
Japan doesn’t have a national credit scoring system, so creditworthiness is determined on a bank-by-bank basis. To apply for credit, you may need to provide proof of employment, income verification, a resident status card and more.
These requirements could vary from one financial institution to the next, so you may want to consult fellow expats, or reach out to the U.S. Embassy, for more guidance. Establishing a positive relationship with a Japanese bank can help build credit history over time.
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. This system might take the credit history of different household members into account when scoring an applicant.
If you don’t qualify for household considerations, you may have to find alternative ways to build credit. And some banks require permanent residency status, or proof of income, before they extend a line of credit.
Spain
Spain doesn’t use credit scores. But the country’s credit register, the Risk Management Center (CIR), tracks credit history.
The CIR tracks negative credit activity, such as late payments or delinquent accounts. If a consumer’s credit profile includes negative items, the consumer could be blacklisted from financial institutions. Borrowers could remain blacklisted until the debt is paid, or for a period of up to six years.
The United Kingdom
The U.K. doesn’t have universal credit scores. Instead, each of the country’s credit bureaus, or credit reference agencies (CRAs), has its own credit scoring system and score range.
For example, Equifax’s range goes up to 700, but Experian’s range stops at 999 and TransUnion’s top score is 710.
Similar to U.S. credit bureaus, CRAs track consumer financial information, such as payment history and credit limits. But the U.K. system takes additional factors—like voter registration—into account when calculating credit scores.
You may need to meet the country’s electoral registration requirements before you can register to vote. But meeting these requirements could take some time. So it might be a good idea to find alternative ways to build credit history until you can join the electoral roll.
