How to Get a Loan in the UAE With A Bad Credit Score

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Did you regularly miss your credit card payments? Did you make a credit card mistake that put a spot on your otherwise good credit score? Even the slightest mistake can pull your credit score and credit report down. Consequently, your reputation as a borrower is hampered and banks hesitate in giving you a business loan in the UAE or a home loan in the UAE.

What is a Bad credit score?

A credit score lower than 500 is considered bad. A credit score between 500-700 is average and if your credit score is lies between 700-750, you have a good credit score. Any score above 750 is excellent.

Most Common Reasons for a lower credit score

  • Missing Credit Card payment
  • Irregular card utilization
  • Closed an old credit card
  • Delay in paying loan installment
  • A significant shift in your financial condition

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In case you are facing issues with your loan approval due to a bad credit score, then you can resort to these alternative methods to get a loan approved almost instantly.

Opt for Private Lenders

For your small needs, you can go to your peers or friends, or relatives to borrow money. However, you cannot seek hefty amounts through such methods. Under such circumstances, private lenders may come to your rescue. Private moneylenders let you borrow money without even checking your credit score. This method had been one of the traditional secured methods of borrowing money even before the banks. You can find a reliable private lender who will lend you that hefty amount without any security. However, remain cautious! Private Moneylenders usually charge a high rate of interest.

Offer a Collateral or Opt for a Loan with Security

In case the bank denies you a loan due to your low credit score, you can offer the bank some type of security that will assure the bank that they will have pledged assets in case you fail to repay your debt. The best thing about a secured loan is that the bank will not check your credit score and give you a loan irrespective of your credit score. However, again, the bank may charge a high rate of interest for secured loans. In the form of a secured loan, you can receive a business loan in the UAE or a home loan in the UAE.

Ask for Loan From Your Credit Card Provider

Many credit card providers offer account transfers against your credit card. In case you already possess a credit card, you can request your bank to transfer the balance credit on your credit card to your bank account. The banks usually offer transfers up to 80% on your credit card balance. You can choose to repay this debt in easy installments at lower interest rates. Some of the best credit cards in the UAE are:

Consider Advance from a Bank 

Some banks in the UAE provide you special offer to borrow money in advance on your savings account. When you open a savings account with such banks, you are allowed to borrow the amount from the bank against your savings account. You can borrow an amount of up to 80% or more of your monthly salary and repay this amount by next month. This is a good option to receive an extra amount over your salary and meet your demands. However, you require paying the borrowed amount by next month.

Ask for Advance Salary

When you need an extra amount or business loan in the UAE or a home loan in the UAE and banks or financial institutes do not come to your rescue, you should try asking for an advance in office. Your office can give you a loan against your job and deduct some amount as a monthly instalment from your salary. This is a viable solution to deal with your problem.

Resort to Credit Unions

Credit Unions offer business loans in the UAE and home loans in the UAE without considering your credit score. A credit union has fewer restrictions and more benefits that allow you to repay the loan flexibly. However, credit unions may charge you a higher rate of interest against loans but you may receive more time to repay your loans.

Sell your Assets

Nothing is as beneficial as selling your assets to earn money. In case you want money urgently, consider selling your assets. This is the most effective method of getting some quick cash without borrowing or paying interest.

Best Banks for a Business Loan in the UAE or Home Loan in the UAE

Some financial institutions offer home loans and business loans in the UAE without checking your AECB credit score or credit report which means that even with a poor credit score, you can borrow money from these financial institutions. These include:

Through these banks and financial institutions, you can obtain a business loan in the UAE or a home loan in the UAE at lower interest rates even with a bad credit score.

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How to Improve your Credit Score in UAE

If you know that you will require a loan soon and you have a lower credit score, you can focus on improving your credit score. Improving your credit score in a short span may seem challenging but with the right approach, you can improve your credit score enough to receive a business loan or home loans from banks. Here are some methods you can use to improve your credit score:

  • Punctuality -  Punctuality is the key to a higher credit score. If you have a lower credit score due to late credit card bill payments, you can turn your fortunes and your credit report by mending your ways. When you pay your credit card bill timely for a few months, your credit report and credit score reflect the transformation in your attitude. This will help you in obtaining a business loan in the UAE or a home loan in the UAE.
  • Reduce overall debts - If you have too many loans against your credit account you need to cut loose some loans to improve your credit score. Only a few banks would consider giving you a loan if you are already in debt. However, if you reduce your loans, your credit score will shoot up instantly and you will be eligible for loans without any problems.
  • Monitor your Credit Regularly - Checking your credit score regularly keeps you on top of your credit. You should constantly check your credit report to locate any errors in your credit report and rectify them instantly.
  • Spend Carefully - Last but not least, as a responsible credit card owner, it is important to be mindful of your spending habits. Do not spend beyond your limit, else you will end up in debt. Overspending is one of the most common reasons for bad credit scores in the UAE. Spending carefully on your credit card is a good way of managing your credit score. Judicious spending will improve your credit score immediately and you will be able to get that business loan in the UAE or home loan in the UAE almost instantly.

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