Benefits of Having a Good Credit Score in UAE

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    The credit score is a three-digit score that is calculated as per your bill payment and credit history in the UAE. It is considered a crucial indicator of your financial stability and the payment of your liabilities (or a lack of). The score is used by lenders and other financial institutions when providing you with financial services and products. Consequently, one can expect numerous benefits of good credit scores in the UAE in terms of approvals and the terms of a financial product.

    To find out the specific benefits of having a good credit score in UAE, continue reading below.

    Calculation of Credit Score in UAE

    The Al Etihad Credit Bureau (AECB) is tasked with the calculation of credit scores. The AECB keeps a track of numerous financial data points across the UAE and collects your financial information from banks, lending companies, credit card companies, utility providers, and other financial institutions. The data is collected and analysed to calculate your credit score. 

    Understanding Good and Bad Credit Scores

    Before understanding the benefits of good credit scores, let’s first look at how the scores are ranked from good to bad and everything in between. 

    When it comes to ranking the score, the following range is generally used –

    Range of Credit Score

    Ranking

    Star Rating

    300 to 540

    Very low

    1 star

    541 to 650

    Low

    2 stars

    651 to 710

    Medium 

    3 stars

    711 to 745 

    High 

    4 stars

    746 to 900

    Very high

    5 stars

    insurer your car

    The Benefits of Good Credit Scores

    Given below are some of the key benefits of having a good credit score in practical terms –

    Easy Availability of Loans and Credit Cards

    Any type of credit facility, be it a loan or a credit card, can be availed only if you have a good credit score. A good score assures the providers that you are a creditworthy borrower, which allows them to quickly sanction the loan or issue the credit card. 

    Moreover, with a good score, you would have multiple options of loans and credit cards to choose from as almost all financial institutions offer these products to individuals with good scores.

    Better Interest Rates on Debts

    Most lenders offer preferential interest rates on loans and credit cards to applicants that have a good credit score. Thus, with a high credit score, you can avail of lower interest rates on your debts. This means that you can get these loans more affordably and save money on the interest cost.

    Better Chances of Negotiating the Interest Rates 

    When you have a good credit score, you will also be able to negotiate with the provider to offer you better interest rates on the loan. As financial providers and institutions view applicants with higher credit scores favourably, they are generally open to interest rate negotiations with them.

    Ease of Renting a Property

    If you are in the market for rental accommodation, you may need a high credit score for the tenant to offer you a rental property. Landlords often check credit score UAE of prospective tenants to gauge their ability to pay rent on time. If the score is high, the tenant is viewed favourably, which means easier access to rental properties.

    Discounts on Insurance Premiums

    Several insurance companies promote higher credit scores by offering premium discounts to policyholders with high credit scores. Thus, one of the good credit score benefits in the UAE can be availed in the form of affordable insurance premiums. 

    How to Maintain a Good Credit Score?

    Here are some tips to follow for maintaining your score to avail of the aforementioned good credit score benefits –

    1. Always pay your bills on time
    2. Pay your credit card bills in full, every month
    3. Pay your loan EMIs punctually
    4. Avoid applying for multiple loans simultaneously or within a short period 
    5. Don’t close old credit cards – You can instead maintain them properly to enjoy a higher credit limit, which reduces your credit usage ratio and helps in improving your credit score
    6. Have a healthy mix of credit products in your portfolio

    Checking Your Credit Score

    Checking your credit score regularly can help you keep a tab on how it is performing as per your recent financial decisions and actions. However, a key detail to note here is that while you can check your credit score through the Al Etihad Credit Bureau (AECB), the process is not free. The AECB charges a fee for this check, which is AED 10.5 if you check online and AED 21 if you do it offline. The fee includes a VAT of 5%. 

    If, however, you wish to check your credit score free of cost, you can choose Policybazaar UAE. With Policybazaar UAE, you can find out more about credit score in UAE as well as check your credit score without paying anything. 

    Ultimately, the benefits of a good credit score are many, and you can avail of all such benefits if you try to keep your score above the 700 range. Thus, keeping the good credit score benefits in mind, one should take the necessary steps to get a ‘high’ or ‘very high’ score on your credit report.

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