Your credit score is a numerical indicator of your creditworthiness, reflecting your ability to repay debts. These scores help lenders evaluate the risk of lending money to individuals, ensuring responsible lending practices. In the UAE, credit scores are assessed on the basis of factors such as payment history, debt levels, length of credit history, and more.
A high credit score signifies reliability, which makes obtaining loans, credit cards, or mortgages considerably easier at favourable terms. In the UAE, credit scores fall in the range of 300 and 900.
A credit score on the higher side, as mentioned earlier, indicates better creditworthiness, increasing the likelihood of favourable loan terms. Scores above 710 are usually considered excellent, while those below 500 may make it challenging to obtain credit.
As per the categorisation followed in the UAE, 612 would be considered a low credit score. This rating may result from late settlements, loan defaults, or a high debt burden. With this credit score, getting approved for unsecured credit —loans and credit cards — without the need for security or other forms of collateral may be challenging.
Have a look at the table below to understand the general categorisation of credit scores followed in the UAE:
Credit Score Range
We will now explore what are the chances of individuals with such a credit score to obtain different types of credit in the UAE -
Credit Cards for 612 Credit Score
With a credit score of 612, you can certainly have a few options for credit cards. However, as a score in the low range indicates a low credit profile, it can make it difficult for you to qualify for certain credit cards with attractive rewards and benefits.
With a credit score of 612 in the UAE, the most practical option for you would be secured credit cards. These credit cards, requiring a deposit in the form of collateral, are generally easier to obtain with a lower credit score. However, it’s essential to carefully review terms, fees, and interest rates associated with such cards to make an informed decision and start rebuilding credit.
Another option that you can try to get a credit card with this score would be enlisting yourself as a co-applicant on another person's credit card.
Personal Loans for a 612 Credit Score
With a credit score of 612, you would be eligible for personal loans at least in terms of credit score requirements. Of all the credit products in this list, personal loans are usually the easiest to obtain with a low score. However, it’s worth noting that the terms and conditions might be less favourable than those with higher scores.
Lenders may view a credit score of 612 as an indication of a higher-risk borrower, leading to higher interest rates, stricter eligibility criteria, or lower loan amounts. To increase your chances of approval, you should provide complete and accurate information on your loan application and emphasise your stable income and employment history.
Homes Loans for a 612 Credit Score
The most difficult one after just seeing the easiest option! Getting a home loan sanctioned on a 612 credit score could be the most challenging task (compared to other credit products).
This is because home loans or mortgage loans generally make for the biggest financial commitments in terms of loan amounts, not to mention the long repayment tenures (up to 25 years). As a result, banks and lending institutions are quite strict with respect to the creditworthiness of the applicant here.
In the rare case of approval with such a score, you may have to face considerably higher interests, collateral requirements, lower loan amounts, and more.
Auto Loans for a 612 Credit Score
If you have a credit score of 612 in the UAE, obtaining an auto loan may be challenging. It is generally advisable to hold off on applying for an auto loan while you raise your credit score so that you may eventually be qualified for lower interest rates. However, there are other ways to get a car loan if you need one right now, regardless of your credit score.
You can, for instance, consider getting a cosigner if you have a friend or relative who has a good credit score. Alternatively, you can connect with your car dealer and enquire whether their financing department has any plans available for those with a low score.
Insurance Plans with a 612 Credit Score
In the UAE, credit scores can impact insurance premiums, although the effect is not as pronounced as that on credit instruments. Insurance providers tend to consider credit scores as part of their procedure to assess an individual's risk profile.
A higher credit score, as we saw earlier, indicates responsible financial behaviour and is associated with lower risk. Thus, people with higher credit scores may often get rewarded with lower insurance premiums. On the other hand, individuals with poor credit scores may be deemed higher risk and could face higher insurance premiums.
Tips to Improve Your 612 Credit Score
If your current credit score is 612, don’t worry! Here are some easy tips that you can follow to maintain and boost your credit score in UAE -
Pay your bills timely: Timely payment of bills is crucial for a good credit score, as late payments can negatively impact your credit history and lower your score. You can set reminders, automate payments, and create a proper budget to make sure that you pay all your bills on time.
Lower your credit card balances: It’s worth noting that high credit card balances can hurt your credit utilisation ratio, which compares credit card debt to your credit limit available. To have a good credit score in the UAE, you should try keeping your credit utilisation below 30%, which can demonstrate responsible credit management on your part as well.
Clear off your debts: When seeking to improve your credit score UAE, you should try to clear off as much of your debts as possible. This way, you can demonstrate financial responsibility on your part and establish a good credit history. Another benefit of this is that your debt-to-income ratio would be lowered, which can be of great help when you apply for a new loan or credit card.
Keep old accounts open: An oft-ignored factor in improving credit scores is the length of credit history. Instead of closing your old credit cards, you can keep them open to maintain a longer credit history, which, in turn, can positively impact your score.
Avoid multiple new credit applications: Applying for multiple new credit accounts within a short period can lower your credit score. Since each application generates a hard inquiry, which adversely affects your credit score, multiple loan applications can lower your credit score significantly.
Check your credit report regularly: Regularly review your credit report for errors or discrepancies. If you spot any inaccuracies, report them to the credit bureau for correction. A clean and accurate credit report is essential for an improved credit score.
Note: It’s important to avoid overdoing this - occasionally checking credit scores or reports would be sufficient.
Diversify your credit mix: Having a healthy mix of credit accounts such as credit cards, mortgages, loans, and more can demonstrate your ability to handle different types of credit and portrays you as a responsible borrower. However, make sure to only take on credit that you can manage responsibly - failing with repayments can do the opposite and bring down your score.
Be patient and consistent: While following all the tips discussed above, it’s worth remembering that improving your credit score takes time and requires consistent efforts over time. Thus, you should be responsible with your financial decisions and maintain good payment habits over a prolonged period to see progress.
How to Check Your Credit Score for Free?
The credit scoring system in UAE is managed by the al etihad credit bureau (AECB), which collects credit information from various financial institutions and creates credit reports for individuals. As a UAE resident, you can check your credit score by visiting the AECB website or mobile application. Note that AECB charges AED 84 for generating your credit score and report online.
You can also check your credit score range for free while applying for a loan or credit card on Policybazaar.ae. For this, you can continue on our site, click on the ‘Banking Products’ tab, and choose the option for a free credit score check. Once done, simply follow the prompted steps to access your credit score range.
A 612 credit score, as we saw in the article above, is a low credit score in the UAE. While you can get a credit product like a personal loan with this credit score, it’d be generally difficult to get credit (especially at favourable rates) with this score.
With that said, instead of worrying whether the 612 credit score is good or bad, you should remember that improving your credit score is a simple process. By consistently following the above-mentioned tips, you can eventually raise your credit score and enhance your financial well-being.
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