The Norwegian credit score system
A credit score is a number representing your creditworthiness and helps banks and other potential creditors determine the risk of lending you money. According to the new lending regulation put forward by the Norwegian Ministry of Finance, Norwegian banks must obtain information about a person’s financial situation through a credit score before processing a loan application.
The credit score in Norway ranges typically from 1-100, at times from 1-1000. 1-20 means that the risk of lending money is considered to be very high, and 71-100 is very low. The higher the score, the better your chances of getting a good deal. Banks will usually compensate for the heightened risk of lending money to someone with a low credit score by increasing the interest rates. If your credit score is very low, your loan application is likely to be rejected altogether.
The credit score is given by one of the four credit reporting agencies in Norway based on available information about income, tax, debt, assets and demographic data such as age and address. As stated in this guide about loans with payment remarks, any payment remarks or betalingsanmerkning will also be taken into account and negatively affect the credit score.
Credit score when you’re new in Norway
Many people wonder if their credit score from other countries can be transferred to or affect their credit score in Norway. The short answer is no. When moving to Norway, you will start from scratch, as the Norwegian credit reporting agencies cannot access information about your personal finances from other countries.
That should be good news for anyone who’s not too happy about their credit score outside Norway – and perhaps equally disappointing for those who are.
Since the credit score doesn’t build on your previous credit history, it also means that it will take some time to build up enough data in Norway to achieve a good credit score. The credit reporting agencies will, for instance, collect information about wealth and income tax from your yearly tax return from the Norwegian Tax Administration, Skatteetaten. The deadline for submitting the tax return for the previous year is April 30.
That means that if you move to Norway in January, more than a year will pass until there is a tax return registered in your name. In the meantime, your credit score is likely to stay relatively low.
How to improve your credit score in Norway
Since the credit score system in Norway is based on relatively stable parameters such as income and age, there aren’t too many tricks to help improve the score quickly. Still, it might be good to know the following if you want to improve your credit score.
Avoid payment remarks
Any payment remark, betalingsanmerkning, will lower your credit score dramatically, so do what you can to avoid getting one. The most common reason for getting a payment remark in Norway is bills that continue to go unpaid, despite several attempts to collect the money.
Note that you won’t be caught by surprise by a sudden payment remark, and you will have many chances to repay your debt before the payment remark is registered. In short, the creditor will involve a debt collection agency. As a result, you will receive a debt collection notice, a final request for payment, and a notification that legal actions will be taken. Only then, if you still don’t repay your debt, can a payment remark be registered and subsequently affect your credit score.
The good thing is that once you have repaid your debt, the payment remark will immediately be deleted and will no longer affect your credit score negatively.
Increase your personal assets
Increasing your personal assets will help increase your credit score. It signals economic control and that you will have something to fall back on in difficult times. If you have assets abroad, you can consider transferring them to Norway, as that’s the only way it will improve your Norwegian credit score.
Note that credit reporting agencies can only access information about your assets through the current tax return, based on your registered assets by the end of the previous year. So it might take some time before your efforts to increase your personal assets will be reflected in your credit score.
Low income will affect your credit score negatively. The same goes if you have a fluctuating income that differs much from year to year. Securing a steady and high income is, therefore, a way for you to improve your score.
Reducing your debt
Pay off your debt regularly, and try to get rid of expensive debt such as consumer loans as soon as possible. As your debt decreases, you will see that your credit score will increase.
Interestingly, moving frequently will affect your credit score negatively. Also, living in an area where loan defaults are more common can lead to a lower score—something to think about if you’re looking for a new place to live.
Age will be considered when calculating the credit score, based on statistics about job opportunities and income. Young people will generally receive lower credit scores. The same goes for people above 70 years, whereas being in your mid-40s will impact your score positively.
Checking your credit score
Do you have a national identity number, fødselsnummer, and BankID? Then you can check your credit score through the credit reporting agency Bisnode.