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A credit score is a great way to determine whether an application for a mortgage, loan, credit card or other financial services from an institution has a possibility of being approved. The credit score, which is displayed as a three-digit figure, falls between the ranges of 300 to 900 for the UAE.
While the actual outcome of the approval is dependent on many variables, the AECB credit score is a significant element that is taken into consideration. Therefore, understanding how to fix your credit score quickly is essential for making it simple for you to receive the financial product or services of your choice.
Policybazaar UAE gives you a deep insight into the world of credit scores. If you are troubled with the query on how to fix low credit score, this is the article for you. Let's continue our discussion on the topic and familiarize ourselves with the pertinent data.
AECB or the al etihad credit bureau assesses a person's credit score in the UAE. The AECB obtains all pertinent information regarding the borrower from various agencies and provides the necessary data to banks in the form of credit reports or credit scores.
The definition and magnitude of a good credit score vary from region to region. In the UAE, a credit point of 700 is regarded as a healthy credit score. However, you can have a lower credit score which you can fix quite easily. We have all the expert solutions in this article to help you fix your credit score.
There are several factors that can affect your credit score. You must be well-educated about these factors so that your credit score does not dip down below 700 in the UAE. The AECB divides credit scores in the UAE into five fundamental categories:
Each category is given a star rating from 1 to 5, with 1 being the lowest star and 5 representing the highest star.
Please refer to the following table for a clearer understanding of the credit score system in the UAE.
Very low (1-star)
746 and higher
Very high (5-star)
The higher the credit score is, the fitter you are for a debt or a loan. Therefore, it is quite natural that you would like to boost your credit score to apply for suitable loan amounts.
An extremely low credit score may prove to be a barrier to several credit-related endeavors. This involves applying for loans and opening credit card accounts. Additionally, a very low credit score has an impact on items like UAE insurance rates. The credit score is still a crucial aspect in determining the rate for the majority of insurance kinds, even though it may not be the main influencing factor when it comes to insurance premiums.
In general, having good credit can lead to cheaper premiums, whilst having bad credit can lead to higher premiums.
You are more likely to be approved for credit and receive better interest rates and conditions the higher your credit score. Low credit scores might make it challenging to qualify for credit at all, let alone credit that is affordable.
Here are a few adverse effects of a low credit score.
A financial institution or a bank approves a loan when you have a healthy credit score. If you do not have a good credit score, they will think twice before approving a loan. Plus, you will face difficulties in getting bigger loans sanctioned. For instance, home loans or car loans are usually high and if you do not have a good credit score, banks will not approve such loans.
If you have a low credit score, it is concluded that you tend to fall behind when it comes to repayment. Therefore, banks and money lending institutions will ask for greater security deposits as a safe way out. In case you falter to repay the loan, the financial institution will seize the security deposit. The deposit may include your home, car, and other valuable assets.
A low credit score is always a deterrent factor when it comes to applying for a new credit card. The first thing the credit card provider will look into is your credit score. This is the mirror of your creditworthiness. If you don’t have a good credit score, you will not be sanctioned a credit card of sufficient balance.
When you apply for a fresh loan, the premium amount is often determined by your credit score. If you have a credit score below 700 in the UAE, you are susceptible to paying higher premiums on insurance. For instance, when determining your prospective risk of filing a claim, car insurance companies frequently obtain data from your credit report in addition to your driving record.
Understand the fundamental components of credit score such as whether you pay your payments on time and whether you have credit card balances and pinpoint the issues that are having a negative effect. Another crucial step is to check your credit report for mistakes.
The following factors have the most effects on your credit score:
So, the most straightforward way to fix your credit score is to keep your payments on time. Here are some recommendations for the same:
Apart from timely payments, you should follow the practices outlined below.
Browse through the best credit cards in the country and apply for the most convenient one through Policybazaar UAE. We also offer credit score services. Unlock these exciting features today and let us collaborate with you for a long and fruitful financial journey.
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