What a Credit Score Actually Is
A credit score is a number that represents how likely you are to repay borrowed money based on your history of borrowing and repayment. Lenders use it to decide whether to approve you, and at what interest rate.
Higher score = lower perceived risk = better loan terms. The difference between a good and a poor score can mean tens of thousands in extra interest over a mortgage's lifetime.
Not every country uses a single numeric score. Some use scoring models, some use detailed credit reports without a score, and some rely primarily on bank relationships. Here's how the major systems work.
FICO and VantageScore (300-850)
The US has the most score-centric system. Two main models:
- FICO Score: Used by 90%+ of lenders. Range: 300-850. "Good" starts at 670; "Excellent" at 800+.
- VantageScore: Same range, slightly different weighting. Used by some fintech lenders and for consumer-facing scores.
What affects it (FICO weighting):
- Payment history (35%) - on-time payments are the single biggest factor
- Credit utilization (30%) - how much of your available credit you're using
- Length of history (15%) - older accounts help
- Credit mix (10%) - mix of installment and revolving credit
- New credit inquiries (10%) - too many applications in a short time
Three bureaus: Experian, Equifax, TransUnion. Each may have slightly different data (not all lenders report to all three). Check all three annually at AnnualCreditReport.com (free).
Three Agencies, Three Different Scales
The UK has three credit reference agencies, each with their own scoring scale:
- Experian: 0-999. "Good" is 881-960; "Excellent" is 961-999.
- Equifax: 0-1000. "Good" is 420-465; "Excellent" is 466+.
- TransUnion: 0-710. "Good" is 604-627; "Excellent" is 628+.
Important nuance: UK lenders often look at the full credit report rather than just the number. Being on the electoral roll, having a stable address, and having active credit accounts all matter. Unlike the US, income is NOT part of your credit file.
Free access: ClearScore (Equifax data), Credit Karma (TransUnion data), MSE Credit Club (Experian data).
Equifax and TransUnion (300-900)
Canada's system is similar to the US but uses two bureaus instead of three:
- Range: 300-900. "Good" starts at 660; "Excellent" at 760+.
- Factors: Similar to US - payment history, utilization, length, mix, inquiries.
- Unique: Checking your own score does NOT affect it (soft inquiry). Borrowing.com and Credit Karma offer free access.
Comprehensive Credit Reporting (0-1000 or 0-1200)
Australia moved to "comprehensive credit reporting" in 2018, which includes positive data (on-time payments) - previously only negative events were recorded.
- Equifax: 0-1200. "Good" is 622-725; "Excellent" is 833+.
- Experian: 0-1000. "Good" is 625-699; "Excellent" is 800+.
- illion: 0-1000. Similar thresholds to Experian.
Free access: Credit Savvy (Experian), CreditSmart (Equifax). Request your report free once per year from each bureau.
Schufa and Country-Specific Systems
There is no EU-wide credit score. Each country has its own system:
- Germany (Schufa): Score from 0-100% (probability of repayment). 97.5%+ is excellent. Based on payment history, account age, and number of credit inquiries. Free self-inquiry once per year (Datenkopie).
- France: No universal credit score. Banque de France maintains FICP (incident file) for defaults. Lenders assess based on income, employment stability, and existing debts.
- Netherlands: BKR (Bureau Krediet Registratie) tracks all credit agreements. No numeric score - lenders see your active contracts and any arrears.
- Nordic countries: Public tax records mean lenders can verify income directly. Credit scoring is less central; stable income and clean payment history matter most.
Universal Principles for Building Credit
Regardless of country, these principles apply everywhere credit exists:
- Pay on time, every time. This is the #1 factor in every system that tracks payment history. Set up autopay for minimums at least.
- Keep utilization low. In countries with revolving credit (US, UK, Canada, Australia), use less than 30% of your available credit. Under 10% is ideal.
- Don't apply for too many products at once. Multiple hard inquiries in a short period signal desperation to lenders.
- Keep old accounts open. Account age helps in most systems. Don't close your oldest credit card even if you rarely use it.
- Check your report regularly. Errors happen. Dispute anything incorrect. Every country gives you free access at least once per year.