Credit score is a crucial measure used by banks and financial institutions to assess an individual’s creditworthiness and previous debt repayment history. After the Al Etihad Credit Bureau introduced credit ratings, the loan market was radically altered. When you apply for a credit card or a personal loan in the UAE, the first thing the provider looks at is your credit history and repayment history. Individuals with a poor credit score should be aware that they may wind up paying a higher rate of interest or, in the worst-case situation, their loan application may be denied.
The credit score is not only a significant limiting element in the approval and disbursement of personal loans in the UAE, but it also plays a part in the approval and disbursement of credit cards. If you want to receive any type of credit in the UAE, whether it’s a credit card or a personal loan, you’ll need to keep your credit score in good shape.
The following are some of the best-handpicked ideas for boosting your credit score in the UAE.
Don’t Forget About Repayments:
Making regular payments on your financial commitments is the first step toward establishing a solid credit score. Never miss a payment, even if it’s only by a day, because it will affect your credit score in the long term. If you have a propensity of missing due dates, you may always opt for auto-debit to ensure that your financial responsibilities are paid on time. If you’re going on vacation and won’t be able to make the payment outside of the UAE, pay it a week ahead of time to avoid damaging your credit score.
Examine all of your credit cards and loans:
The lending market in the UAE, particularly in Dubai, offers attractive deals that are difficult to refuse, and many people take advantage of these opportunities. The more credit cards you have, the more likely you are to have a credit score problem. As a result, the second stage in establishing a good credit score in the UAE is to analyse and evaluate your credit cards, as well as other financial commitments.
Get Rid of Unused Plastic:
Try to get rid of any superfluous credit cards that you are unlikely to use in the next three to six months. Every unused credit card increases the Debt Burden Ratio (DBR). To put it another way, if you have four credit cards and aren’t using three of them but haven’t submitted them to the bank for closure, they will still be added to your DBR, affecting your credit score.
Anyone reaching a death burden ratio of 50% would not be considered eligible for additional credit, according to the central bank’s criteria. If your entire outstanding financial obligations exceed 50% of your total income, the only way to get more credit is to pay down your current bills. A debt load ratio is a useful measure for both banks and individuals to estimate how much more credit they can obtain. This certificate is crucial because closure records are not always updated on the Al Etihad Credit Bureau’s servers, therefore it serves as a written verification.
Try to pay off your credit card debt completely:
In an ideal world, we should pay our entire credit card account at once; but, if you are experiencing financial hardship, you may choose for the minimal payment. Paying your credit card account on time, and in whole, not only keeps your credit score in good shape, but it also gives you piece of mind.
Making minimal credit card payments results in the imposition of interest, which raises the amount owed and has an impact on your credit score. The trick is to make a significant payment of the outstanding amount all at once, which will help you pay off the debt and raise your credit score.
Your credit history is solely your responsibility:
People with low credit ratings frequently point the finger at banking/financial organizations’ tools and products. In reality, your credit report is a reflection of how you manage your debts. Your credit score will improve as you manage these bills more effectively. However, the more carelessly you use your debts or make payments, the worse your credit history will become. Try to develop good spending habits so that you will need less credit and, if you do, you will be able to manage it better.
The Al-Etihad Credit Bureau, which was founded by the state in 2010, is the governing organization in charge of credit ratings and scores. The maximum credit score is 900, with a minimum score of 300. A good credit score is subjective, although typically ranges from 500 to 700. With the procedures outlined above and a strong commitment, you can create a solid credit score that will enable you to obtain whatever form of credit you require in the future.