What does a 519 credit score mean?

An individual's creditworthiness in the UAE is indicated by a number between 300 and 900 called a credit score. Its relation with your financial records is fairly straightforward - the more financially responsible you have been, the higher your score.

A credit score is based on your credit history such as the number of functioning bank accounts, the total amount of debt, history of repayment, and other elements. Credit scores are checked by lending institutions to know your creditworthiness, which helps them decide whether to approve or reject your application for credit cards, loans, and more.

Besides credit, the initial amount needed to get a smartphone, DTH, utility, or to rent an apartment also depends on your credit score. Consequently, your financial life can be drastically affected by your credit score.

In this article, we will focus on understanding what a 519 credit score means and what you can avail of at such a credit score.

Who Calculates Credit Scores in the UAE?

In the UAE, credit scores and credit reports are generated by the AECB, short for the al etihad credit bureau. Everyone in the UAE can check their credit score by logging onto the AECB mobile application or website. To establish a credit score for an individual using online platforms, AECB charges AED 10.5.

When you submit an application for a credit card or bank loan with Policybazaar.ae, you can also get a free AECB credit score range check. Your credit report and score, on the other hand, can be generated via AECB online platforms for a price of AED 84. AECB is the only organisation in the UAE that generates credit scores for residents and citizens, unlike some countries where many organisations are involved.

What Does a 519 Credit Score Mean?

A credit score of 519 is considered to fall in the ‘below average’ category. It indicates a lack of credit records or past credit issues. Credit scores of this level can make it difficult to get qualified for unsecured credit, which does not require collateral or a security deposit, whether you're searching for a personal loan, a mortgage, or a credit card.

You may be eligible for particular types of loans based on your other requirements such as income and work. However, lenders frequently view applicants with a 519 credit score as high-risk, so even if you are approved, you will probably have to fork out more money in fees and interest rates than those with better credit ratings.

Credit Cards for 519 Credit Score

You have little chance of getting a typical credit card with a 519 credit score. Compared to loans guaranteed by tangible resources like mortgages and vehicle loans, credit cards are unsecured types of debt, so banks are often a little more cautious. Remember that there are still a few choices. For instance, an additional authorised user can be added to someone else's credit card.

You can also seek a secured credit card as an alternative. Secured credit cards function exactly like standard credit cards, down to regular credit reporting. The distinction is that you normally need to "secure" the account with a deposit that is equal to your credit limit.

Secured cards may be more easily accessible to those with bad credit because they are less risky for credit card issuers. And if the lender informs the AECB about your prompt payment and other credit activities, a secured card may be advantageous for you as a borrower in terms of maintaining and improving your credit score.

Personal Loan for 519 Credit Score

If your credit score is 519, it can be difficult for you to be eligible for a personal loan. You may not have the opportunity of shopping around for the top personal loans at the lowest rate of interest given your existing credit score. Instead, you may have to go with a personal loan that has a high rate of interest and additional costs like an origination charge. Due to this, you could find a personal loan to be highly undesirable, especially if you want to use it to pay off high-interest card balances.

On the contrary, if you want to use a personal loan to finance a significant purchase, you should consider whether you actually need it now. You may be eligible for a personal loan down the road with a reduced APR and better terms if you can wait till you have finished establishing credit. Consider a payday loan if you're extremely strapped for cash and are having trouble securing a personal loan that you qualify for.

Home Loan with a 519 Credit Score

With a 519 credit score, it may be challenging to obtain a home loan, similar to personal loans. Since a mortgage loan is one of the lengthier liabilities a person may incur (most mortgages have terms of 20 to 25 years), obtaining a home loan with a 519 credit score may be even more challenging.

With a low credit score, you can consider taking out mortgage insurance before securing a home loan in the UAE. A mortgage insurance plan will financially protect your property and even enable you to get a loan at a reasonably low rate despite having to pay a larger down payment (due to a low credit score). Moreover, in case of an unforeseen situation, this insurance plan can help in settling the loan.

Auto Loans for a 519 Credit Score

With a credit score of 519, getting approved for a car loan will not be simple. If your application is accepted, the loan may come with a high-interest rate that might significantly increase the cost of the vehicle during its lifetime.

You could finally be able to receive better rates if you give yourself enough time to improve your credit score before applying for a car loan. Yet, there are several methods that can help you secure a vehicle loan with a poor credit score if you don't have the time to wait. This can include the following:

• If you have a reliable relative or friend with a high credit score who is ready to share the burden of a car loan with you, you can certainly think about getting a co-signer.
• Go looking for other lenders, such as a credit organisation or an online lending institution.
• Enquire at the dealership whether there is a financing division that specialises in helping those with bad credit.
• Financing with "buy here, pay here" only should be used as a final option.

519 Credit Score and Insurance Plans

Many people overlook the connections that the term "credit score" may have to other closely-related but distant sectors because it appears to be directly tied to banking matters. Insurance is one such industry. Regardless of the type, insurance plans are nevertheless impacted by the applicant's credit score even though they are not financial or banking products.

The idea of insurance is likewise predicated on client risk profiles. Your insurance premium increases in proportion to your level of risk. When creating an applicant's risk profile, the applicant's credibility is a key factor. The applicant is often categorised as an unreliable creditor if their credit score is 519 or lower.

The insurance provider cannot rely on you to pay your insurance payments on time if you are an unreliable creditor. As a result, insurance premiums may be raised to account for the risk that a person with a low credit score poses. In summary, if your credit score is 519 or lower, you could face paying exorbitant insurance costs for all types of insurance plans.

With at least an average credit score, you can easily obtain affordable insurance premium rates. Of course, a number of additional factors also have an impact on the final cost you pay for insurance coverage. Credit scores, however, are equally significant in this situation.

How to Get Loans for a 519 Credit Score?

As per your credit history, credit utilisation, repayment records, and other indicators, the AECB credit score evaluates your credit portfolio. With this, the bank evaluates your risk level and ability to repay by looking at your credit score. While many people think it is difficult to secure a loan with a 519 credit score, here are some steps you may take to change that -

• Provide Adequate Income Sources to Support EMI Payments - Even with a 519 credit score, the lending institution may nevertheless take into account your loan application if you just received a pay raise or have another source of income. Telling the bank that you have solid work and income may persuade them to approve the loan regardless of your credit rating.
• Apply for a Lower Loan Amount - Applying for a large loan with a low AECB score typically entails greater risk for the lender. If you fail to make your payments, the bank will suffer a large loss. However, by requesting a smaller loan with a 519 credit score, you lower the risk to the bank and increase their confidence in approving it.
• Apply with a Co-applicant - It is easier to obtain low credit score loans when a co-applicant or guarantor has a respectable AECB score. Your eligibility will improve as a result of their income and reputation, which will provide the bank or lending institution greater confidence to approve your application. However, keep in mind that seeking a guarantor or co-applicant requires work, as this person will be responsible for repaying the loan in the event of a default.
• Opt for a Secured Loan - After you have attempted the aforementioned two strategies for getting a 519 credit score loan, you can try putting up some type of security. Loans against property are among the most widely used types of secured loans. A loan against property is essentially a sizable loan that you can apply for as long as you provide documentation for any property you own as security or collateral. Up until your loan balance is repaid, the lender retains ownership of the documents. The bank has the authority to sell your property at auction to recoup the debt if you cannot pay it.
• Check Your Credit Report for Errors - Although rare, it is possible for AECB credit reports to have errors/inaccuracies related to identification, financial and credit history, repayment, and more. Without your fault, such errors could lower your credit score. For this reason, it is necessary to regularly check your credit report for problems and report them so that they can be fixed.

Know What You Can Do to Improve Your 519 Credit Score

To improve your 519 credit score, you take the following measures -

• Try to Achieve Credit Utilisation of 30% or Less - The percentage of your available credit that you are using currently is referred to as your credit usage. Paying up your balances on credit cards in full every month is the easiest way to maintain your credit utilisation under control. A general guideline to help you maintain and improve your credit score in UAE is to maintain your total remaining debt at 30% or less than your overall credit limit.
• Pay Your Bills on Time - Your credit score will suffer if you make late credit card payments. In order to raise your credit score, you can start by making certain that you make all of your payments on time. It should be noted, however, that this practice extends beyond credit card bills - you must follow it for all other recurring monthly payments, including those for personal loans, vehicle loans, home loan instalments, and so forth.
• Clear off Existing Debts - One of the easiest strategies to raise your credit score is to repay all outstanding debts and make all required payments on time or early. To pay off your current obligations and improve your credit score, you can use a variety of choices such as balance transfer, personal loans, cash advances, and more.
• Pay off Your Revolving Account Balances - A substantial debt on revolving credit accounts may result in a high credit usage rate and lower your scores, regardless of whether or not you are in default on your payments. Revolving accounts, like credit cards and other debts, can raise your credit ratings if you keep the balance on them below the credit limitations.
• Consider Debt Consolidation - It can be advantageous for you to obtain a loan for debt consolidation from a credit union or banking institution and use it to pay off all of your outstanding bills (if you have a lot of them). If you can get a loan with a reduced interest rate, you will be able to pay off your debt quickly because you will only have one obligation to worry about. This could raise your credit score and lower your credit use percentage.
• Limit Your Credit Applications - Hard inquiries can have a negative impact on your credit score for up to two years. Requests for a fresh credit card, a home loan, a car loan, or another type of new credit can all be considered hard enquiries. A few hard queries here and there probably will not make much of a difference.

Yet, a large number of hard inquiries within a short time frame will harm your credit rating. Banks could interpret your demand for money as a sign that you are having financial problems and pose a greater risk as a result. So if you are trying to improve your credit score, avoid requesting new credit or loan for some time.

To Conclude

A credit score of 519 is considered below average in the UAE. It suggests a lack of credit history or previous credit problems. When applying for unsecured credit, which does not need collateral or a security deposit, such as a personal loan, mortgage, or credit card, credit scores of this level can make it difficult to get approved.

You have a limited chance of getting a conventional credit card with a 519 credit score. Similarly, you can find it challenging to be approved for a loan if your credit score is 519. Unfortunately, you may be forced to settle for a loan with a high-interest rate and other fees like an origination fee.

Despite the fact that insurance policies are not financial or banking goods, they are still influenced by your credit score. Additionally, the concept of insurance is based on client risk profiles. Your level of risk is directly correlated with the increase in your insurance premium, as your credibility (indicated by your credit score) plays a significant role in developing the risk profile.

With credit scores being dynamic, you shouldn’t panic even if your score is as low as 519. In this case, you can start being more responsible with finances and follow a few tips like reducing your credit utilisation, going for debt consolidation, limiting the number of credit applications, clearing existing debts, and more.

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