Worried about your credit score? Here is how you can improve it!

Credit Score reflects your credibility to the banks and other financial and non-financial lending institutions.

In UAE, the credit report is prepared by Al Etihad Credit Bureau (AECB), set up by the UAE’s federal government in 2010. The bureau gives you the score between 300 and 900. A poor credit score decreases your credit worthiness. So, the higher the score is, the better it  is.

Credit Score Vs Credit Report

Often we see people using these terms interchangeably, which isn’t correct. A credit score is a score ranging from 300-900 which is calculated by AECB by collecting your credit and payment information from financial and non-financial institutions in UAE. A credit report is then prepared using this score, reflecting how credit-worthy you are and probability of you defaulting on loans or not.

Let us now discuss the points that affects your credit score and how to improve it:

  1. Late payments on bills – All dues on bills should be paid in time for a good credit score.
  1. Multiple credit cards and it’s limit, usage and payments – Having multiple credit cards does not damage your credit score. It depends on how you manage them.

Minimum payment option gives you a relief in short run, but if this continues for a longer period, it causes serious damage to your credit score. Paying off higher portion of your credit card will lead to maintaining and  improving your score.

The newer the card is, shorter will be your credit history and difficult for banks to understand  your credit  worthiness to decide upon lending you or not.

You must have a solid repayment record, which refines the credit history.

  1. Loan or Credit card defaults – If you are using credit cards or have a loan already running in your name, any late payment or default would directly affect your credit score. To maintain a good score, you need to plan and make all such payments in time.
  1. Pre-existing loans – The more debt you have, the harder it will be to take out more credit. Reducing the amount of outstanding debt you owe, will help you improve your credit score.
  1. Existing & Unused Accounts –All unused accounts should be closed and existing accounts should reflect stable and regular repayments. In case you are already struggling with a bad credit score, timely repayments over a period of time will help you improve your score.

Remember, you can maintain a good credit score by having a systematic financial planning. A three-digit number and a star rating are what that stands between you and the loan or the credit card you want. With a little common sense and smart financial habits you can achieve both!


Stuti Srivastava, Gulf Finance Team.

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