This is just a brief overview of what a 590 credit score means. it is important to understand that what can you get with 590 credit score before applying for any loan or Credit Card.
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Your credit score determines your creditworthiness as a borrower. It is a three-digit number that symbolises your financial condition and ability to repay the debt. Credit scores play a crucial role when it comes to getting approved for credit facilities like loans and credit cards. The higher the credit score, the more the possibility of your loan application getting approved.
This article attempts to give you clarity about the role of credit scores in the loan application process.
Once you submit your loan application, the bank reviews the application and contacts Al Etihad Credit Bureau to get your credit report and credit score. Your credit history and repayment patterns are the two most important things to be reviewed in the report. If you have a low credit score, the loan application either gets rejected or high-interest rates are charged.
Your application will get approved if you have a high credit score. You can even negotiate the interest rate payable for some types of loans at your convenience. Once the documents and credit report meet the eligibility requirements, the loan is disbursed to the borrowers.
The following is the information that banks look for in your credit report -
The following are a few ways in which high credit scores can benefit you with your loan application process and loan terms -
The minimum credit score to get a loan in the UAE is usually set at 580. Most banks will accept your loan application if your credit score is at least 580. However, you should work on improving the score with the timely repayment of debts to get favourable loan terms. High credit scores are ideal to get the loan terms you require for any kind of loan.
It is now understood that a good credit score is crucial to get your loan application approved. Therefore, it is essential to know what factors can influence your credit score. Some of these factors are discussed below -
In the UAE, your bill payment history takes up 35% weightage of the credit score calculation. Therefore, it is necessary to pay all bills on time including utility bills like DEWA and SEWA bills. Every bill paid on time builds up your credit score while missing out on the deadlines reduces it. Bill payment history also includes bounced cheques. So it is important to submit legitimate cheques to pay bills.
How you use your credit card builds up about 30% of your credit score. You can easily build your credit score by using your credit card responsibly. However, missing out on credit card debt repayment can decrease your credit score drastically. Besides the bill payment, another thing to consider is how much you use the credit card. Maxing out the card hurts your credit score significantly. Experts suggest that you should use only 15 to 30% of the credit card limit.
Your credit history impacts your credit score by up to 15%. It signifies how long you have been using loans and other credit instruments. It covers everything from your first bank account to your recent credit card. A longer credit history shows that you have responsibly handled your credit instruments for a long time and hence have significant experience.
A diverse credit portfolio constitutes 10% of the credit score. If you have several, well-managed credit instruments and accounts, your credit score is likely to be high. However, it is advised to not secure multiple similar credit instruments at once, for example, credit cards. If you fail to manage one of the credit instruments effectively, your credit score will decrease.
Frequently checking your credit score can hurt it since it may depict financial instability. A few soft inquiries have a negligible effect on your score however multiple inquiries may lead to a compounded impact. It is, therefore, recommended to check the credit score only once every quarter.
|Credit Score for different types of Loan|
|Credit Score for Personal Loan||Credit Score for House Loan|