Late payment impacts your credit score and can have serious consequences for your financial future – learn all you need to know about it in our comprehensive guide!
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A credit score is a number between 300 and 900 that helps banks and other lending organisations decide whether you can be trusted when you apply to borrow money. Besides credit scores, lenders also figure this out by looking at things like how well you have paid back loans before, how much money you owe, and how many new loans you have recently opened.
The higher your credit score (closer to 900), the better you are perceived with respect to the management of credit. In the UAE, this is really important if you are seeking credit.
In the UAE, your credit score is worked out using information from different institutions like banks, government agencies, and phone companies. They focus on two main things: how well you pay back what you owe and how much credit you use compared to what you can borrow.
Remember, your credit score is not set in stone. It changes based on how you manage your money and loans over time.
Lenders assess your credit score to gauge the likelihood of you repaying your debts on time, i.e., the level of risk that you pose as a borrower. As a result, your credit score holds substantial influence over your loan eligibility, mortgage approval, and the credit limit extended on your card.
If your bank contacts you with an offer to elevate your credit card limit, it is indicative of a positive credit score. Conversely, a declined loan application might stem from a lower credit score. Individuals with higher scores might also secure more favourable interest rates with select lenders.
Tabled below are the UAE credit score ranges that you, as a borrower, must be aware of -
|Credit Score Range||Stars Allotted||Category|
|300 to 540||1||Ver Low|
|541 to 650||2||Low|
|651 to 710||3||Medium|
|711 to 745||4||High|
|746 to 900||5||Very High|
The credit score within the UAE, as we saw earlier, reflects an individual's financial credibility directly. This underscores the paramount significance of your score for entities such as banks and other institutions that hinge their transactions on trust.
Various entities utilise the credit score in the following ways:
Your credit score is determined using more than 2,000 data points from several financial sources such as banks, financial institutions, courts, telecom, and other utility companies. Your credit score is also established based on your existing financial habits.
Here are the factors taken into account when calculating credit score in the UAE -
Discussed below are the general constituents of a credit score in the UAE -
|Credit Score for Other Types of Loan|
|Credit Score for Car Loan||Credit Score for personal loan||Credit Score for Student Loan||Credit Score for Home Loan|
You can check your credit score in two ways -
To check your credit score in the UAE using the AECB mobile application -
Policybazaar.ae, in partnership with the AECB, provides you with an opportunity to access your credit score for free. You can head to the ‘credit score’ section on our website and provide a few essential details in the credit score form to check your credit score range.
By reviewing your credit report, you can get insights into the factors impacting your score negatively. Once you have all the information, you can take steps to improve your credit score accordingly.
Here are the general steps to boost your credit score in the UAE -
Guide for Credit Score in UAE
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|Reasons for Low Credit Score in UAE||What is a Good Credit Score in UAE?|
Have a look at what people are asking about credit scores in the FAQ section next -
You cannot usually improve your credit score within a month. It takes a regular and disciplinary practice of various steps such as repaying debts and bills on time, not exhausting your credit card limit, and more.
Factors like missed payments, having multiple credit cards and loans at once, bounced cheques, and the usage of your credit card to the entire limit can negatively impact your credit score.
The average credit score in the UAE ranges between 650 and 710.
The minimum credit score in the UAE to apply for a loan is usually 580. Keep in mind that different loan providers have different requirements.
Good credit score in the UAE typically ranges between 680 and 730.