In the UAE, a good credit score is one which is above 680. The UAE is renowned for its luxurious and affluent lifestyle. However, with this extravagance comes the need for loans and credit cards, and your credit score plays a vital role in the eligibility of your application.
If you’re concerned about your credit score, then you’re in the right place. We’ve discussed all you need to know about credit scores in the UAE.
What Is A Credit Score?
A credit score is assigned by Al Etihad Credit Bureau (AECB). It’s a statistical three-digit number that evaluates your creditworthiness. The scores range from 300 to 900. A high score means a better credit rating.
Why Is This Number So Important?
Credit scoring was recently launched by AECB. It’s considered a more advanced version of credit reporting. Individuals with good scores can acquire benefits such as faster application process times, lower interest rates, higher loan amounts and credit limits, and much more.
How Are Credit Scores Created?
Your credit score is based on the analysis of your financial data, such as number of loans, credit cards, how frequent credit installments are paid, number of delayed or skipped payments, level of debt, utilization of the credit limit, bounced cheques, etc.
Your credit score allows financial institutions to make faster and more informed decisions about an individual’s applications. Your score helps predict how likely you will make credit card and loan repayments.
Those with high scores are given preference. Therefore, if you have a high score, you are deemed less risky, and your application has a better chance of getting approved.
What Is A Good Score?
The minimum credit score for credit cards in UAE is 300, and the maximum is 900. A credit score in the UAE between:
- 300 – 619 is poor
- 620 – 679 is fair
- 680 – 730 is good
- Above 730 is excellent
Hence, you should aim for a credit score above 680.
What Happens If I Have A Low Credit Score?
Various incidents can lower a credit score. For instance, missing a credit card payment or not paying an electricity bill on time will hurt your credit score.
One of the commonly believed myths about credit scores is that a low credit score will be with you forever and can stop you from getting a loan or a credit card. But that is not true.
While a score below 400 is more likely to be turned down, every financial institution sets its own limit. Some are willing to take the risk and accept lower credit scores.
How Can I Improve My Credit Score?
A low credit score won’t stick to your name forever. You can easily improve it by:
- Paying bills on time
- Reducing outstanding debt
- Regularly paying taxes
- Managing more than one credit account
- Avoid negative actions such as delinquency, bankruptcy, delayed repayments of debt, etc.
Final thoughts
Having a good credit score in UAE comes with a boatload of perks. Now that you know how to improve your score, you need to ensure it remains in good standing.