Are you Aware of Your Credit Score in UAE?

By PolicyBazaar
  | Published: 30 May 2020 | Last Updated On: 04 June 2021

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Every customer in the banking sector in UAE has come across the term known as the “credit score.” If you are not well aware of it, in layman terms, it is a three-digit score that is assigned to an individual and plays an essential part in deciding the individual’s eligibility for a credit card in UAE or a loan at any of the banks. 

There is a credit report issued by the bureau called Al Etihad Credit Bureau or AECB which includes an individual’s credit score. It consists of financial information of an individual collected from various sources and generates a report after analysis of the details. This report is then used by financial institutions and banks to determine the applicant’s capacity for loan repayment. 

What Does a Credit Report Contain?

AECB gathers all the information of a person from sources such as financial institutions, banks,  and telecom companies. After gathering this information it forms a single report.

Some of the banks in the UAE provide the information on their customers once every now and then, whereas, others such as the Union National Bank follow the approach wherein there is daily data submission from their end. This helps AECB in updating the reports of the individuals in a quick manner without any delay when required.

The credit report consists of relevant financial information such as the number of loans he or she has taken up, the individual’s credit card in UAE, the due date and any delayed payments by the individual, any skipped payments, the utilization of the limit on his or her credit card in UAE,  any bounced cheques, the number of debit cards he or she holds, etc.

Along with a summarized number of pre-existing personal loans, it also details the previous loans and details on the number of applied loans and the status on these applications i.e., if the loan has been rejected or accepted by the lenders.

All these details combined in a single report will generate a score that is commonly known as the credit score.

The Credit Score Range

  • The credit score of an individual usually ranges between 300 to 900.
  • The higher the credit score of an individual, the higher are is the probability of his loan getting approved.
  • Usually, a credit score that is above the benchmark of 700 is considered to be a good score.
  • If the credit score of an individual lies below 700, he or she must work towards improving it.

Commercial Credit Score

AECB along with providing the credit analysis of individuals in the UAE also provides it for the companies that are based in UAE.

This commercial credit score helps the various banks in the approval of loans that are applied for by the companies. The businesses in UAE can obtain their credit score by visiting any of the centers of AECB along with their trade license and a letter signed by the manager, owner or partners of the business requesting a credit score of the same.

It should also be signed by an authorized bank based in the UAE.

The Fees Charged

There are certain fees and charges involved in obtaining credit reports. AECB charges an amount of AED 105 for providing a credit report including the credit score. Individuals can also just obtain a credit score exclusively for an amount of AED 31.50 and a credit report for an amount of AED 84.

The credit score for companies or the commercial credit score can be obtained by paying an amount of AED 220.

Note: The fee and charges are subject to changes.

Is this Credit Report Provided By AECB Beneficial?

In case an individual is applying for a secured loan, banks offer credit based on guarantor or collateral. However, it can be slightly riskier in case you are applying for an unsecured credit option, such as a credit card in UAE, or a personal loan in UAE, etc.

Therefore, in order to determine the creditworthiness of an applicant, financial institutions or banks ensure to get a financial background check on the applicant which can be determined by obtaining a credit report.

So any individual that is applying for a loan or a credit card in UAE should be sure that they have a good credit history and score in order to avoid their application being rejected.

How Can I Get a Good Credit Score?

As it was mentioned above, a credit score that is above the benchmark of 700 is said to be a good credit score. Some tips that can help an individual in maintaining a good score are:

  • Making bill payments on time: This is one way to improve your credit score that is very common and at the same time extremely important in helping in the improvement of your credit score. Even if the payment of your bills is just a day late, it is added to your credit report and can thereby impact your credit score.
  • Credit utilization: Despite the limit on your credit card in UAE, it is important for you to utilize the credit provided to you in a wise manner. Generally, it is recommended to use about only 30% of the credit limit assigned to you.
  • Making credit card payments in full: The holders of credit card in UAE are given a provision of paying only 5% of their monthly dues. This can negatively impact your credit report. Therefore, you should pay your bills on time.
  • Debt management: You should aim at clearing the loans you are holding that charge you a high-interest rate. Try to have lesser debts on your hand, and only apply for loans that you actually require.
  • Credit card accounts: People are often faced with the misconception that holding many credit cards in UAE can positively impact their credit score. The number of cards that you hold has nothing to do with your credit score. The way that you utilize your credit card is what ultimately impacts your score.

How Can I Access The Credit Report?

Earlier one could get their credit report by visitng any of the centers of AECB or by filling the form online on the website. However, now AECB has launched its mobile app wherein individuals can log in and access their reports.

A credit score has become an extremely crucial factor. None of the financial institutions or banks in the UAE process a loan without analyzing the applicant’s credit report. So you should always aim at getting a good credit score and to maintain it.

You may also like this - Credit Score in the UAE - All You Need to Know