Checking your credit score in the UAE is an important step, as it helps you in managing your finances and enables you to make informed decisions. Your eligibility for loans, credit cards and other financial products is largely determined by your credit score, which represents your creditworthiness.
This guide is extremely beneficial for anyone who is looking to improve their money management skills, understand the fundamentals of personal finance, or are an aspiring entrepreneur looking to build a strong financial foundation.
What is credit score in the UAE?
The credit score is a three-digit number that predicts the likelihood of an individual or a company to miss payments in the next 12 months. It ranges from 300 to 900 and the higher your score the lower the level of risk. The score is generated using statistical models that factor multiple data points from your credit profile. Similar to a financial report card, a credit score indicates how effectively you handle your finances. It is a figure that banks and other lenders consider when determining whether to extend credit to you or reject.
How is credit score calculated?
You might wonder how credit scores are calculated in the United Arab Emirates. Your credit score is calculated by the UAE government’s Al Etihad Credit Bureau (AECB).
AECB compiles every detail of your payment history — including credit card, loan, mortgage and bill payments — as well as other information for individuals as well as companies. Then, it uses this information to calculate your credit score. Since 2014, AECB has started providing credit reports. It’s crucial to keep in mind that credit ratings for individuals and companies can change based on how regularly they pay their debts and other obligations on time.
How to check your credit score?
You can easily check your credit score on AECB’s website. Below are the steps:
- Visit the official AECB website
- Choose For Individual or For Companies
- Click on Get a Credit Report Now
- Log in or sign up
- Select Get Report
- Pay the fee to download your credit report
You can also check your credit score using AECB app. Below are the steps:
- Download the AECB app from iOS or Google Play Store
- Log in by scanning your Emirates ID
- Click on Get Credit Report
- Pay the fee to download the report
You can also check your credit score by visiting any AECB branch with your passport copy, Emirates ID and valid email address.
Benefits of checking the credit score
There are several benefits of checking your credit score from time to time. Here are some of them:
Financial awareness
Understanding your financial state and identifying opportunities for growth is made simpler by checking your credit score.
Loan eligibility
When evaluating whether you qualify for a loan or other credit product, lenders consider your credit score.
Negotiating power
Having a strong credit score provides you with the ability to bargain for lower interest rates and loan terms.
Financial planning
Having an understanding of your credit score helps you create targets while making wise financial decisions.
How to improve your credit score?
You do not have to worry if your credit score isn’t where you would like it to be. The following suggestions can help you make it better:
Apply for credit
Get a modest loan or a credit card first. Pay your bills on time, and only take out loans that you can afford to pay back.
Repay debts on time
Pay your credit card, loan bills, utility and rent payments on time. Set up automatic payments if necessary.
Keep an eye on your credit report
Check your credit report on a regular basis for accuracy, and get in touch with the credit agency to report any mistakes.
Keep your credit utilization ratio in check
Make prudent use of your credit and maintain balances considerably below the credit limit — ideally, less than 30 percent.
Don’t make multiple applications
Applying multiple times for a loan or credit card at the same time might lower your credit score.
Pay down past-due bills
Prioritize paying off any outstanding bills as soon as you can, credit card debt in particular.
Don’t settle debt early
To show a longer credit history, don’t end loans before they mature and keep older accounts active.
Common myths about credit scores
There are several myths and misconceptions about credit scores. Below are some of them:
Myth: Regularly checking your credit score will make it go down.
Truth: The fact is that checking your own credit report is regarded as a ‘soft inquiry’ and has no impact on your score.
Myth: Your credit score is determined by the salary you receive.
Truth: While it may have an effect on your capacity to pay bills, your salary has no direct effect on your credit score.
Frequently Asked Questions (FAQs)
How can I check my credit score in UAE?
You can check your credit score in UAE by visiting the AECB website and paying a fee of AED10.50.
How can I get my credit report online in UAE?
By visiting the AECB website, you can request your complete credit report for AED84.
What is a good credit score in UAE?
A credit score of 680 to 730 is considered a good credit score in UAE.
What is a credit check in UAE?
A credit report is a compilation of past credit information on UAE citizens and businesses from different financial institutions, utility providers, the government, etc. The AECB report includes a list of all recent and past credit facilities in the last 24 months’ worth of payments.
What is the difference between a credit score and a credit report?
Your credit score is a single number summarizing your creditworthiness. Your credit report is a detailed document outlining your credit history, including accounts, payment history, debts and inquiries.
Can I get a loan in the UAE with a bad credit score?
It’s difficult. However, some lenders might consider you if you have a high enough income. They may also offer loans with higher interest rates.
Conclusion
In the United Arab Emirates, credit ratings are essential to your financial status. You can make significant progress towards financial literacy and independence by comprehending how they operate and what influences them. Keep in mind that having a high credit score is important, so treat it with the same care and attention as any other significant relationship. Keep yourself educated, make wise financial choices, and you will notice a rise in your credit score.
For more news on banking & finance, click here.
