You would never want to be limited by your present balance if you have big dreams. Big dreams want funds, be it a house, car, opening up a business, or anything else. Good credit scoring in the UAE’s financial world acts as a golden key to all the good things. It can give loans, credit cards, and other perks to help in boosting personal and professional dreams.
It’s not rocket science to understand your credit score. Here are some tips to build and maintain a healthy credit score in the UAE:
1. Know Your Credit Score:
Let us begin with getting a firm grasp on your credit score and the working methodology behind it. Your credit reports’ information is gathered from banks, finance companies, and utility companies. Your score will be given as a number from 300 to 900 based on things like how you have paid in the past, how much you owe compared with your credit limit, how long you have had credit, what kinds of credit you use, credit checks, etc.
2. Always Pay Your Bills on Time:
How timely your payments are can seriously affect your credit score and, thereby, your trustworthiness. Late payments on credit cards, loans, utility bills, or even mobile contracts can seriously lower your overall score. You could use auto payments or reminder services so all your bills can be cleared on time and in full.
3. Credit Utilization Ratio Management:
Credit utilization depicts the amount of credit one is using in relation to the total credit available. You want to keep this ratio less than 30%. If, for instance, the limit on your card is AED 10,000, then for good credit practices, you should have less than AED 3,000 outstanding on the card. This trick makes you look responsible towards your credit management.
4. Build a Positive, Healthy Credit History:
A good credit history, one that displays responsible usage of credit and servicing of debt, greatly improves your score. Consider applying for a credit card with a low limit and using it responsibly. Be responsible; don’t let it snare you into owing too much. Pay it off in full every month so you don’t accumulate interest charges and wreck your score.
While commonly held credit products are credit cards, having a mix of credit, a credit card, a personal loan, and BNPLs (Buy Now Pay Later) and managing these responsibilities could positively affect your score in the UAE. It also shows you can strike a balance between two different types of credit.
5. Be Sure to Monitor Your Credit Report Regularly:
The AECB, UAE’s official credit bureau, Al Etihad Credit Bureau, gives you access to one free report every 12 months. Review it thoroughly to ensure there are no errors or inconsistencies. If any, immediately report to the AECB so that these can be corrected.
6. Limit Credit Inquiries:
Each time you apply for a new credit card or a loan, your creditor will check your credit report. While one inquiry does not lower your score too much, several inquiries in a short duration can do severe damage to it. Therefore, avoid making many applications for credit products at the same time and only apply for credit when needed.
7. Be Cautious with Co-signing:
Co-signing a loan with somebody else could be very risky. In case of a default by the borrower, it affects your score negatively too.
8. Have Patience:
To build a good credit score, have patience, as this is not something that will happen overnight. By adhering to these tips and following a financially disciplined lifestyle, one can slowly increase the credit score.
9. Professional Help (Optional):
Look for professional help, that is, from a financial advisor, in case you find it difficult to handle your credit or have a low score. They may offer you personalized advice and strategies to improve your credit.
After you have followed these tips, make it a point to embrace responsible credit handling for score improvement in the UAE. Remember, a good score is your investment in your financial future; it’s what opens doors of opportunity to you and helps you meet your financial goals.
