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MONEY

Money: How to build up a good credit score in Norway 

A strong credit score in Norway will give you access to loans with low-interest rates, and you will face fewer hurdles getting credit cards or postpaid subscriptions. Financial expert Ingvild Aagre explains how to build your credit score.

Here are some of the ways you can improve your credit score in Norway.
Here are some of the ways you can improve your credit score in Norway. Photo by Tierra Mallorca on Unsplash

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. 

READ ALSO: Cost of living: What do workers in Norway spend their salaries on?

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.

Income

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.

Address

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

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.

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EUROPEAN UNION

Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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