Published: 12 June 2019Last Updated On: 13 May 2021
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Credit score has become an important eligibility factor in UAE for a personal loan, credit card and telecom approvals. A credit score is important because it gives the bank a good look at your payback history. That’s why it is crucial to pay your debt on time. Credit score also affects the applicant’s Credit card eligibility UAE, as a good credit score is one of the credit card requirements. Having a good credit score will benefit you with a higher credit limit and lower interest rates in the future. As high credit score indicates lower risk and low credit score indicates higher risk.
A credit score gives the banks and the financial institutions a good idea of the risk factor involved with every client.
Below are the ways to improve credit score-
Pay the Bills on Time- Delay in payment of your bills is one of the reasons that might affect your credit score. Make sure to pay the bills on time. Delay in bill payment puts a strain on your credit score. It might be attested as your inability to pay your debt on time in the future. Avoid late payments at all cost as it will only hurt your credit score.
Reducing Outstanding Debt- If you have already incurred a debt, try to pay it off as soon as possible. You can make a well-calculated payment plan and pay the outstanding amount through it.
Avoid Negative Elements- Negative elements that can affect your credit score are bankruptcy, delinquency, delay in repayment of the debt, hard inquiries, unpaid taxes, collections, etc. Make sure to avoid every one of these factors. Even a single element from these can affect your credit score negatively.
Diverse Account Types- If you manage more than one type of credit card, it would be best for you to be prudent. Managing diverse credit cards can make or break your credit score. Having more than one credit card puts double the impact on your credit score. Don’t max out your credit cards. Even using 90% of your multiple credit cards can affect your credit score negatively. Even if you pay your debt in full. No matter the type of score you are bound to get, the impact is magnified when using diverse accounts.
Clean Repayment Record- Making the payment for your debt on time is extremely crucial to maintaining a solid credit score. The banks get a good idea of your future debt repayment only when they see the past records of your repayment of debts.
Documents Required to Acquire your Credit Report
Original Emirates identity card of the applicant
Copy of the applicant’s passport
Documents Required for Authorization
Copy of the credit report owner’s Emirates ID card
Copy of the credit report owner’s passport
Filled and signed form of the credit report owner’s consent
Bank’s notarized authorization letter or power of attorney (originally notarized) that has the authority to receive credit facilities.
According to Marwan Lutfi, the Chief Executive of Al Etihad Credit Bureau (AECB), there were roughly 3 million active borrowers and 6.5 million credit facilities in UAE in 2018. These credit facilities included Overdrafts in the UAE, loans, mortgages, credit cards. Marwan Lutfi, in an exclusive interview to The National, revealed the changes bought by the organization in the finance sector.
Since the implementation of the credit score, the banking sector has seen an increase in net profits. Also, the percentage of bad debt has been decreasing constantly.
In the future, Al Etihad Credit bureau wishes to create a system where the borrowers’ payment details will be completely transparent to the lenders.
Over to you
While it is necessary to keep your credit score good, it is advised to keep a tab on your credit report too. Check them frequently throughout the year. A credit score is vulnerable to mistakes too. Even after your clean record, due to little errors, your credit score might get low too. Also, fraudulent activities can harm your credit record. Credit card theft and identity theft can leave some inaccurate information on your record, automatically affecting your credit score and your credit card eligibility UAE. So it is advised to keep track of your credit report and to correct it immediately if any wrongful information is added in your credit report.
Some of the other elements that will be included in the making of your credit score are court data, utility bills, salary, etc. These elements are important for the credit score because a person with no prior loans or credit card might seem like the perfect candidate but there might be other court-mandated payments that use up its salary completely. For example alimony, utility bill, school fees, etc. There are various expenses that the banks don’t take into account. With the credit score, every transaction is transparent to the banks and financial institutions. Credit score lessens the risk factor involved.