Having a good credit rating is a reflection of your financial life and gives lenders and other financial services insight into your responsibility for timely repayment of loans, credit cards, and even bills.
This helps them assess your eligibility when you apply for a credit card, loan, or mortgage.
In the United Arab Emirates, a credit score is a three-digit number between 300 and 900.
A lower score suggests a higher risk for the lender, which may lead to a rejection of the application or a reduction in the loan amount. Customers with higher credit scores may qualify for faster loan approvals, higher amounts, and even lower interest rates.
In the United Arab Emirates, a score of 300-619 is generally considered ‘poor’, while a score of 620-679 can be interpreted as ‘fair’. A “good” score is usually between 680 and 730 and if you have a score above 730 it is considered “excellent”.
How is my credit score calculated?
More than 70 companies, banks and credit institutions provide data to Al Etihad Credit Bureau (AECB) daily.
The AELC has calculated the credit scores of 4.5 million people and 200,000 businesses since 2014.
The factors taken into account to calculate your credit score are whether you pay your bills on time, the number of loan and credit card applications you have submitted, and your use of available credit.
How can I check my credit rating?
It’s quick and easy to check your credit score and report. You can connect to the AELC website to access your credit score for Dh10.50. You can also receive a copy of your individual credit report for Dh84 or pay Dh157.50 for a company’s credit report.
Your credit report will show your credit score and personal information, such as your address, employer, and salary.
Each credit facility will display a color coded payment history for the past 24 months. If a payment has been overdue for more than 90 days, you will see a red box while overdues up to 90 days after the due date are shown in yellow and payments made on or before the due date. due date are in green.
Plus, you’ll see how many active loans and credit cards you have, as well as your requests and denials.
If you’re using a credit card, you’ll see your previous monthly balances and a percentage of credit used (for example, if you’re using Dh5,000 on a card with a Dh10,000 limit, you’ll see 50% shown).
Even if you are temporarily working in the UAE or do not intend to apply for a large loan or mortgage, it is still worth checking your report as international lenders may request credit scores in the UAE.
What if there is an error on my credit file?
Another reason to check your credit report is for errors or fraudulent activity. If you spot an error on your report, you can contact the bank or lending institution directly and file a complaint. Once your mistake is corrected, your credit score should automatically change.
You can also raise a dispute with AECB and they can help you resolve the error. They respond to the website form within 10 business days or you can call them at 800 287 328.
If you suspect someone is using your identity to apply for credit or using your existing credit to make purchases, immediately block your cards and notify the AECB, bank or lending institution. You can also contact the police in case of identity theft.
If you are new to the UAE or have not applied for credit, your report will only contain your personal information.
How can I increase my credit rating?
It is worth building your credit score as it gives you access to better loan and credit deals.
You can increase your score by paying your bills on time – try automating them or setting reminders on your phone. Do not apply too many applications in a short period of time. Reduce your credit usage — try to limit credit card spending to 30% to 50% of your maximum limit.
If you don’t have a credit score, it can be helpful to use a credit card for small purchases and pay it off in full each month.
Checking and building your credit can protect you from financial mistakes and fraud, provide a gauge of your financial health, and qualify you for cheaper credit, both in the UAE and abroad.
Alison Soltani is the founder of LeapSavvySavers.com
Updated: March 22, 2022, 04:00