  The electronic and magnetic structures of $ {\rm ScFe_2} $ and of its
dihydride $ {\rm ScFe_2H_2} $ are self-consistently calculated within the
density functional theory (DFT) using the all electron augmented spherical wave
(ASW) method with the local spin density approximation (LSDA) for treating
effects of exchange and correlation. The results of the enhancement of the
magnetization upon hydrogen insertion are assessed within an analysis of the
chemical bonding properties from which we suggest that both hydrogen bond with
iron and cell expansion effects play a role in the change of the magnitude of
magnetization. In agreement with average experimental findings for both the
intermetallic system and its dihydride, the calculated Fermi contact terms
$H_{FC}$ of the $^{57}$Fe M\"ossbauer spectroscopy for hyperfine field, at the
two iron sites, exhibit an original inversion for the order of magnitudes upon
hydriding.
