Credit Scores Explained: How They Work in the US, UK, Canada and Australia
Your credit score affects whether you are approved for a credit card, loan, mortgage or even some rental homes, and how much interest you pay. Yet many people have never checked theirs. This guide explains how credit scores work in four major countries and what actually moves them.
Quick answer: A credit score is a number that summarises your credit report and predicts how likely you are to repay. The most important habits are the same everywhere: pay every bill on time, keep credit card balances low, avoid applying for lots of credit at once, and check your report for errors.
1. Credit report vs credit score
Your credit report is the detailed record held by credit bureaus: your accounts, balances, repayment history and searches. Your credit score is a number calculated from that report. Lenders may also use their own scoring, so there is no single score that every lender sees.
2. Score ranges by country
| Country | Main bureaus | Typical score range | Free report |
|---|---|---|---|
| United States | Equifax, Experian, TransUnion | 300–850 (FICO and VantageScore) | AnnualCreditReport.com |
| United Kingdom | Experian, Equifax, TransUnion | Differs by bureau (e.g. Experian 0–999) | Free statutory report from each bureau |
| Canada | Equifax, TransUnion | 300–900 | Free from each bureau |
| Australia | Equifax, Experian, illion | Differs by bureau (e.g. 0–1,000 or 0–1,200) | Free from each bureau every 3 months |
Because scales differ, a “good” score in one system is not directly comparable with another. Look at which band you fall into, such as “good” or “excellent”, rather than the raw number.
3. What affects your score
The exact formulas are secret, but the main factors are similar across countries. In the US, FICO publishes approximate weightings:
- Payment history (about 35%): paying on time matters most. A single late payment can hurt for years.
- Amounts owed (about 30%): especially your credit utilisation, the share of your card limits you are using. Keeping it below about 30%, and lower if possible, helps.
- Length of credit history (about 15%): older accounts help.
- New credit (about 10%): many applications in a short time can lower your score.
- Credit mix (about 10%): a mix of card and instalment accounts can help a little.
In the UK, being on the electoral roll at your current address also helps lenders confirm who you are.
4. How to improve your score
- Set up automatic payments for at least the minimum on every account.
- Pay card balances down, or pay before the statement date so a lower balance is reported.
- Check your reports for errors and dispute anything wrong with the bureau.
- Space out applications. Use eligibility checkers that use soft searches.
- Keep old, fee-free accounts open where sensible.
- Build credit if you have none with a secured card or credit-builder product, paid in full every month.
5. Myths to ignore
- “Checking my own score lowers it.” No. Checking your own score is a soft search.
- “Carrying a balance builds credit.” No. Paying in full shows the same good behaviour without interest.
- “Income affects my score.” Income is not on your credit report, though lenders consider it separately.
- “Paying a company can fix my score fast.” Be wary of credit repair firms. You can dispute errors yourself for free.
6. Why it matters for borrowing
A stronger score usually means more approvals and lower rates, which can save thousands over a mortgage or personal loan. See our guides to comparing personal loans and fixed vs variable mortgages.
Frequently asked questions
What is a good credit score?
It depends on the scale. In the US, FICO scores of roughly 670 and above are generally considered good. In other countries, check which band your bureau puts you in.
How long do late payments stay on my report?
Typically around six or seven years, depending on the country, although their impact fades over time.
How often should I check my credit report?
At least once a year, and before any major application such as a mortgage.
Can I have a credit score with no credit history?
You may have a very thin or no score. A secured card or credit-builder product can help you start.