Ever wonder why credit scores exist? Believe it or not, some countries don’t care about how high your credit score actually is. Let’s take a look at some countries around the world and how they go about lending money to their citizens.
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When did credit score tracking begin?
In 1970, the Fair Credit Reporting Act passed and created a regulated system that tracked what information would be collected, for how long, what exactly was being reported, and how to obtain copies of your credit report. It wasn’t until 1989 that the first general-purpose Fair Isaac Corporation (FICO) score was created.
What countries have credit scores?
Not all countries have a credit score system like the US and some only track negative payments. Below we’ve compiled a list of a few major countries and their unique credit scoring system – or lack thereof.
In Germany, the credit system is modern and refined. The private enterprise SCHUFA is known for fair credit building steps to ensure you start off on the right foot. The company works much like a U.S. lender, tracking loan activity, open accounts, unpaid balances, and even fines. Every citizen begins with 100, and the score slowly diminishes as you borrow more money. 90 is considered an above-average score according to SCHUFA.
You’re planning your next trip to the north, eh? Canada’s credit building system operates with Equifax Canada and TransUnion Canada. Much like the U.S., each creditor keeps track of payment history, age of accounts, and credit utilization. Based on your track record, you will receive a score between 300 and 900. 680 is considered an above-average and can help you qualify for a loan with a lower interest rate.
Japan makes it very easy for its citizens to maintain good credit scores. As a Japanese citizen, as long as you maintain a healthy relationship with your bank and your employer, you should have no problem getting credit approval. Non-Japanese however, encounter more difficulties due to the lack of Japanese credit bureau data for them to pull from.
Traveling to the UK this year? The names of these 3 credit agencies should ring a bell. Experian, Equifax, and Credit Karma work in the UK much as they do here in the U.S. To earn a line of credit or qualify for a mortgage, you must show good standing in payment history, credit utilization, and age of accounts. As a bonus incentive, the UK offers a boost to your credit score if you register on their Electoral Roll.
In Spain, credit history is tracked in their Risk Management Centre (CIR). In order to receive any type of credit, the CIRBE must first complete a credit check to highlight any past payments or current debts. As a traveler, make sure you bring the information about your credit report from your home country. Keep in mind that however, most Spanish loan approvals are denied for non-Spanish citizens.
Up until 2014, Australia only reported negative marks. As of 2021, there are four credit reporting agencies, Equifax, Dun and Bradstreet, Experian, and the Tasmanian Collection Service. This new credit reporting system – similar to the US – allows lenders to make a more balanced assessment of a borrower’s likelihood of repayment based on their history and current accounts.
To determine your credit score they collect the following: credit file age, type of credit, amount you’ve applied, negative marks, court judgments or defaults, payment history, and open and closed accounts.
Is my credit score useful anywhere in the world?
Currently, an international credit scoring system doesn’t exist. However, your rental history, proof of income, and in some cases referrals from the U.S. may help your case when applying for credit overseas.
Is there an international credit report for individuals?
Simply put, no. Credit scores built in the U.S. are only valid within the borders of the country. However, if you get citizenship in another country that utilizes a credit score system, you can establish a credit score in dual countries.
Can I build credit abroad?
This is determined by which country you’ll be residing in. However, Equifax operates in 15 countries across Europe and Latin America. Additionally, you must know the local laws because there are laws in place that forbid sharing of credit information overseas.
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