What is a good credit score in uae? Lets find out

A credit score is a three-digit number that reflects how well you can handle debt. It’s crucial when applying for a new credit card, car loan, or personal loan. 

Additionally, if you’re considering buying a property in Dubai, your credit score is vital as it affects your eligibility for a mortgage.

This article breaks down credit score, what is a good credit score and emphasizes its significance. We’ll also share practical tips on improving your credit score.

While Above 731 is considered as an Excellent credit score, Let’s dive into more details.

What is a Credit Score?

A credit score is a three-digit number ranging from 300 to 900. It serves as a tool for banks and lenders to gauge your likelihood of repaying debts punctually. This metric is derived from data collected from banks or organizations where you hold accounts or credit within the UAE.

Your credit report encompasses:

• Credit limits
• Outstanding payments
• Payment history, including missed payments and returned cheques.

Why Does Your Credit Score Matter? 

A high credit score indicates a commendable history of loan repayments, making banks more inclined to lend to you. A robust credit score is crucial for securing a mortgage, car loan, personal loan, or credit card.

Conversely, a low credit score categorizes you as a “high-risk” borrower, diminishing the likelihood of loan approvals by banks.

How Is Your Credit Score Calculated in Dubai?

Credit scoring in the UAE follows a global approach, assessing past creditworthiness and potential future risk of non-payment. Though there are slight variations, the score hinges on your payment history regarding liabilities.

In Dubai, the Al Etihad Credit Bureau (AECB) issues credit reports and scores. AECB gathers data on your credit history, covering items like credit cards, phone bills, mortgage installments, and loans.

This information is processed through an algorithm by AECB to predict the likelihood of missed payments in the next 12 months, resulting in a three-digit credit score.

Factors influencing your credit score include:

• Timely debt payments
• Full payment adherence
• Incidents of returned cheques

Keep in mind, your credit score is dynamic and can fluctuate based on your financial behavior.

What Is a Good Credit Score in Dubai?

In the UAE, a credit score surpassing 680 is deemed good, as per the Al Etihad Credit Bureau. Conversely, a score below 620 is considered unfavorable, posing challenges for loan eligibility.

Refer to the table below to gauge your credit score:

• Above 731: Excellent
• 680 – 730: Good
• 620 – 679: Fair
• 300 – 619: Bad

For securing a mortgage, a credit score ranging from 650 to 700 is typically required.

It’s important to note that diverse lenders may stipulate varying credit scores based on their criteria and the type of credit sought. Hence, inquire about the specific credit criteria when exploring different lenders.

Payment Of Credit History And Its Duration

Credit history and payments play a significant role in determining your overall credit score. Timely payment is crucial, as it is the most important factor affecting your credit score. Whether payments are made on time or delayed can have a substantial impact on your overall credit score. 

Therefore, it’s essential to ensure all dues are paid promptly to facilitate smooth approval of your home loan. If a payment is delayed beyond 30 days, it’s the borrower’s responsibility to inform the lender before the due date.

• Type Of Account

The type of bank account you utilize is another factor influencing your credit score. Maintaining a diverse set of bank accounts is considered beneficial for your credit score.

• Latest Credit Activities

Recent financial activities are taken into account when determining the overall credit score in Dubai. If an individual has engaged in various mortgages or loans from different banks or has submitted multiple applications, it may have a negative impact on the credit score. Similarly, a history of delayed payments can also reduce your score.

• Amount Of Debt Accumulated

An individual’s inability to repay debts leads to an automatic reduction in the credit score. Banks and lenders are reluctant to approve loans and credit for individuals already burdened with debt.

How to Check Credit Score in the UAE?

To check your credit score, you have three options: online, through an app, or by visiting a branch.

Check Credit Score Online via AECB Website:

• Go to the official AECB website.
• Choose “For Individual” or “For Companies.”
• Click “Get a Credit Report Now.”
• Log in or sign up.
• Select “Get Report.”
• Pay the fee to download your credit report.

Check Credit Score Using AECB App:

• Download the AECB App from iOS or Google Play Store.
• Log in by scanning your Emirates ID.
• Click “Get Credit Report.”
• Pay the fee to download the report.

Check Credit Score Visiting AECB Branches:

Visit any AECB Branch with your Passport Copy, Emirates ID, and Valid Email Address. Request a credit score check and report. Keep in mind that fees may vary.

How Can You Improve Your Credit Score in Dubai?

The simplest and most direct method to enhance your credit score is to ensure timely bill payments and decrease outstanding credit.

Furthermore, steer clear of these common mistakes that can lower your credit score:

• Missing or delaying payments
• Allowing cheques to bounce
• Maintaining numerous lines of credit
• Exhausting credit card limits.

What is the Minimum Credit Score for a Loan in the UAE?

To qualify for a personal loan in the United Arab Emirates, you must have a credit score of at least 580. While 580 is the minimum required, it’s important to recognize that higher credit scores often lead to better interest rates and more favorable loan terms. Thus, maintaining a good credit score is crucial not just for loan approval but also for securing improved loan conditions.

Bottom-Line

Concluding our guide on credit scores in the UAE, armed with this information, you can confidently manage your credit, ensuring a healthy credit score. This opens doors to opportunities like car loans, mortgages, and more.

For those seeking a mortgage in the UAE, Mayfair Properties is the ideal starting point. With their mortgage experts, they can assist you in finding the best mortgage tailored to your needs.

While the process may appear somewhat demanding, the prospect of your beautiful new house will make you forget all about these steps.