When it comes to financial history, a credit score is one of the most important aspects to consider. In UAE, credit scores determine creditworthiness, which can affect an individual’s ability to obtain a loan, a credit card, or a mortgage. In this blog post, we will discuss what a credit score is and what factors affect it. We’ll also cover how to check credit score in UAE and what a good credit score is.
Finally, we’ll share some tips on improving your credit score so you can take control of your financial future. Read on to learn everything you need about UAE credit scores.
What is a Credit Score?
A credit score is a three-digit number reflecting a person’s capacity to pay off debts. It ranges between 300 and 900 points, with higher numbers indicating a better chance of loan approval. This score is determined based on a consumer’s credit history, including the number of open accounts, total debt, and repayment history.
A high credit score can lead to lower interest rates and higher loan amounts, while a low credit score can result in loan rejections or reduced loan amounts. Checking your credit score is easy in the UAE, and it is recommended to review your score periodically to be aware of your financial standing.
What is a Good Credit Score in UAE?
A good credit score is crucial for anyone wanting to take out loans or credit cards. In the UAE, the average credit score is 773, which is considered good. A credit score of 800 or above is considered excellent, while a score between 760 and 800 is considered very good. However, a score below 680 is seen as poor and may negatively impact your ability to secure credit or loans.
Keeping track of your score and maintaining a good credit history by paying bills on time, keeping credit card balances low, and avoiding missing payments is crucial. In addition, regularly checking your credit score can help you identify any errors or discrepancies, allowing you to take corrective measures if necessary.
How to Check Credit Score in UAE?
To check your credit score in the UAE, you can visit the official website or office of the Al Etihad Credit Bureau (AECB). You must provide all necessary documents, such as your Emirates ID and passport number. Individuals and businesses must pay AED 84 for online credit reports and score checks and AED 105 for walk-in clients.
For companies, the fees are AED 157.5 (online) and AED 189 (walk-in). If you live outside the UAE, you must have an Emirates ID and a registered mobile phone to complete the process. You will also need to submit copies of your Emirates ID and passport. Checking your credit score is essential since it can help you determine your financial standing and improve your creditworthiness.
What Affects your Credit Score?
Your credit score is an important aspect of your financial health in the UAE. Several factors, such as payment history, credit utilization, and excessive debt, can affect your credit scores. Payment history is one of the most critical factors that impact your credit score. Missing or late payments can significantly lower your credit score.
Credit utilization, which is how much credit you use compared to your credit limit, is also considered. Using too much credit can negatively impact your credit score.
Moreover, increasing the number of credit cards or taking on additional loans can harm your credit score. On the other hand, making payments on or before the due date and reducing the number of credit cards in use can improve your credit score. Checking your credit score regularly can help you identify areas that need improvement and make necessary adjustments to increase your creditworthiness.
How to Increase Credit Score in UAE?
Building and maintaining your credit score in the UAE requires managing your finances responsibly. Reducing the number of credit cards held and consistently paying off outstanding balances on time can increase your credit score. You must avoid maxing out your credit card and be mindful not to use more than 30% of your available credit card limit.
Applying for multiple loans or credit cards quickly can negatively affect your credit score. If you keep these in mind, you can increase your credit score and maintain a healthy and secure credit history.
Your credit score is a numeric representation of your creditworthiness, and it can make or break your ability to get a loan or credit in UAE. Therefore, a good credit score is essential to help you access financial opportunities and get a better interest rate. To check your credit score in UAE, you can request it from any of the three credit bureaus: Al Etihad Credit Bureau, Experian, or TransUnion. To increase your credit score, ensure timely payments, keep your credit utilization low, and regularly monitor your credit report for any discrepancies.
FAQ – How to Check Credit Score in UAE?
What is normal credit score in UAE?
The normal credit score range in UAE is between 300 to 900, with higher scores indicating better creditworthiness. A score of 700 or above is generally considered good and increases the likelihood of being approved for credit or loans with favourable terms. However, each bank or financial institution may have criteria for evaluating creditworthiness, so it is important to check with the specific lender for their credit score requirements.
How do I clear my AECB report?
You cannot simply clear it if you have negative information on your AECB credit reports, such as late payments or defaults. However, you can work towards improving your credit score by consistently making on-time payments, reducing credit card usage, and paying off outstanding balances.
Over time, positive actions will help offset negative information on your credit report, improving your overall creditworthiness. Building a good credit score takes time and effort but is crucial for future financial stability.
What is a bad credit score?
A bad credit score is a low credit score that suggests you may be at high risk to lenders. Typically, a score below 600 is considered poor, while a score above 700 is considered good. A low credit score can make obtaining loans, credit cards, or even rental agreements harder, resulting in higher interest rates or unfavourable terms.
Can I get a car loan with 540 credit score in UAE?
In the UAE, getting a car loan with a 540 credit score may be difficult, as many lenders prefer borrowers with higher credit scores. However, some lenders may specialize in working with individuals with lower credit scores, and it may be worth researching these options.
Additionally, you can improve your chances of being approved for a car loan by offering a larger down payment, having a co-signer with good credit, or providing other documentation that proves your financial stability.
Can bad credit report be removed?
It is possible to have negative items removed from your credit report, but it is not guaranteed. You can dispute inaccurate or outdated information with the credit bureau or the creditor reporting the information. If the disputed information is not verified within 30 days, it may be removed from your report.
However, legitimate negative information, such as missed payments or accounts in collections, can remain on your report for up to 7 years. Therefore, it is recommended to consistently make on-time payments and reduce debt to improve your credit score.
How much does it cost to check AECB score?
A modest fee is associated with obtaining your AECB report and credit score from the AECB. AECB will charge you AED 84 + VAT to produce your personal AECB report. AED 157.5 plus VAT is required to produce AECB reports for businesses. Therefore, this fee is due every time you produce an AECB credit score.