The other piece of the puzzle is:
https://en.wikipedia.org/wiki/Swedish_Enforcement_Authority
Basically the government runs debt collection in Sweden. They have the ability to withdraw money from your bank account.
All of this is enabled by every resident having a (public) personal identity number.
It's generally cheaper to call the cops and file an insurance claim than it is to deal with worker's comp or lawsuits if something goes sideways.
Yes. It's a bit cumbersome, so there are companies specializing in doing this for small debts (say < $5000).
> Are there any drawbacks/cases of misuse?
Hard to say. My impression is that having one trusted party to manage debt collection makes it easier to handle the edge cases in a more humane way, but I haven't really delved into this area.
> Does the government keep a credit score too?
No.