In The Globe’s first On Money personal finance newsletter, reporter Mariya Postelnyak looks at the murky world of credit score calculations.

Three digits. That can be all it takes to make or break your shot at renting that dreamy condo unit with south-facing views, getting a new car or purchasing a home at a favourable rate.

Last month, a Victoria man found his three digits had sunk to zero when his credit score was wiped clean for having – wait for it – no debt. He was rejected for everything from car loans to credit cards.

Few numbers speak more loudly to the health of our finances than our credit scores. People with low credit scores (usually less than 600) often pay hundreds more for car insurance.

But while reporting on last week’s news that Buy Now, Pay Later loans could soon count toward credit scores in Canada, I was struck by how little most of us really know about what’s behind that all-powerful number. ( Here’s a podcast primer on that topic.)

Credit agencies use proprietary tools rarely shared with the public to assess creditworthiness, Andreas Park, professor of finance at University of Toronto’s Rotman School of Business, told me.

Though on occasion they might be studied by outside researchers, “all in all what they do is close to a black box.”

Why should we assume their methods are the best ones?

Case in point: When the Victoria man tried to get his old, very good credit score back, the credit bureau told him he’d have to rebuild it from scratch.

There was little he could do. Virtually no oversight exists for how these scores are calculated.

Prof. Park thinks there could be better ways to measure creditworthiness.

For starters, not all countries use credit scores. In Japan, for example, banks look individually at things like employment and salary.

A 2017 study from the Federal Reserve Bank of Philadelphia found that a scoring model from one fintech often flagged risk better than traditional scores.

These alternatives are far from perfect. But they raise an interesting question: Why should we trust traditional credit models without scrutiny?

“Your credit score can determine the trajectory that your life takes and you just have to take this score as given,” Prof. Park said.

Not everything that can be measured matters, he noted , and not everything that matters can be measured.

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