😎 UAE Credit Scores: How did you (credit) score?
- Kacper Duda
- Oct 30, 2024
- 4 min read
Updated: Dec 29, 2024
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A couple of people have recently spoken to us about credit scores - it's a shady area and nobody really knows how they're calculated. Yet they are so important to our ability to get credit in the UAE and/or back home. Most importantly, they don't have to be spooky at all 👻 (even though it's Halloween season).
So in today's newsletter, we'll explain what a good credit score looks like, why you should care, and, most importantly, how you can check yours.
What is a credit score?
A credit score is a calculated number based on your financial history that aims to predict how well you can handle new credit obligations. The mathematical model to calculate the number uses information from your Credit Report.
Your Credit Report contains up to 3 years of historical data on your financial obligations, debts, and salaries. Your financial obligations can be any form of credit, whether a mortgage, loan or even your telecoms accounts.
All Credit scoring in the UAE is centralised and run by the Etihad Credit Bureau.
Why are credit reports and scores important?
There are two key reasons why you should care about your credit report and corresponding score:
Obtaining new credit - Any finance provider (UAE or other countries) will be checking your credit score to assess your creditworthiness. The higher your score, the more likely you will be approved for a loan and the better the terms you will get.
Spotting fraud against your name - As all your financial obligations are detailed in the report, you should check that you recognise all of them. If anyone managed to set up a loan, credit card or a telecoms account in your name, you'll be able to spot it. Should that be the case, you should contact the provider immediately, and raise a fraud case report too.
What's included in my credit score report?
Your credit report contains details about the following:
Key metrics: credit score and your expense-to-salary ratio. This is used by financial institutions to assess your creditworthiness.
Personal information: your name and ID details, address and contact details.
Salaries: information about your employer(s) and how much you've been paid each month.
Credit facilities: For each financial liability, you'll be able to see your balances, payment history and utilisation levels each month. This covers your loans and credit cards but also telecoms and utilities providers.
What is a good score?
Your credit score is a number between 300-900. Anything above 680 is considered a good credit score, and if you can hit 731, it's considered excellent. The full categories are below:
731 and above - Excellent Credit Score
680 to 730 - Good Credit Score
620 to 679 - Fair Credit Score
300 to 619 - Bad Credit Score
Where to check it.
You can obtain your credit report & score directly from the Etihad Credit Bureau for a fee of AED 84. The service is available through their online portal, the TAMM app or the Etihad Credit Bureau app and is fully integrated with the UAE Pass, so logging in should be easy.
What can I do to build or improve my score?
Having credit: Make sure you have credit facilities in your name, such as credit cards or telecoms accounts. Providers will want to see that you're experienced in managing debt.
Paying on time: Always pay your repayments on time and never miss a payment - this will have a major impact on your credit score.
Utilisation levels: The more of your available credit you utilise, the riskier you become as a customer. As a general rule, you should try to keep your utilisation at 30% of your available credit limit. So if all your cards combined have a limit of AED 50,000, you should not have a balance of more than AED 15,000 on them.
Debt-burden ratio: This is a percentage of how much your monthly repayments on all loans (credit cards, car loans, personal loans, etc.) constitute against your salary. The central bank prohibits lending to people with a debt-burden ratio of over 50%. We recommend this should be kept at a maximum of 30% normally.
So, do yourself a favour and check out your credit report today so you know what you need to do.
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Disclaimer: Please bear in mind that this email does not constitute financial advice. Any choices you make you are solely responsible for. We always aim to provide the highest quality, independent views but do your own research to ensure you’re comfortable with any changes you make to your personal finances.
