5 Steps for fixing credit and improving your score

Credit score has changed the way financial dealings in the UAE when it was introduced a few years ago. The idea behind introducing credit score was to provide the financial institutions a good report of the consumers' credit worthiness. That’s why when an applicant applies for a personal loan in UAE or credit card, their credit score is checked.

Bad credit score can affect not only the personal loan interest rate but also the loan application. 

Steps to improve your credit score in the UAE in the year 2019 are given below-

Keep tabs on your Credit report: First and foremost, get a copy of your credit report from the AECB. That will give you a good idea of your credit score. The report will show you your history with credits, outstanding payments, missed payments, etc. A copy of the most basic credit score report will cost you AED 70. Check it constantly. If you find any mistake in the credit report, report it to the bureau immediately. A credit score might be bad due to mistakes and you would be bearing its negative effects unknowingly.

Repay on time: One of the most important factors that can affect your credit score is the repayment of debts. Always pay your debts on time. If you find it hard to pay your bills on time, you can set up an automatic payment system. That way you don’t have to worry about missing your payments on time affecting your credit score.

Pay your card debt in full: It can happen, that sometimes you are unable to pay your credit card bill. But if you have the financial stability to pay your bill on time, pay in full. Paying the minimum amount of your credit card will only give you temporary relief. However, continuously paying your minimum credit card bill will only affect your credit score despite the temporary relief. 

Paying just the minimum bill of your credit card increases not only your debt but the interest rates too. However, the debt to burden ratio can be lessened by paying off the maximum or all of your bills. This will automatically lead to the improvement of your credit score.

Managing multiple cards: It doesn’t matter how many credit cards you own. What matters is how you manage these cards and how you got them. If you got your hands on these credit cards altogether, suddenly, it paints a suspicious picture. It also makes you seem like a risky borrower. But if you think that you can close all the accounts to improve your credit score, you couldn’t be more wrong. An older credit card has a long history with them. This automatically has a large effect on your credit score. Canceling credit cards that you don’t use can affect your credit score negatively.

A number of debts: Having numbers of debts will affect your credit score too. Having too many debts can get in the way of taking out more loans or credit cards in the future. It is time you start curbing your expenditures and change your lifestyle. Start managing your loans. Pay off the loans as soon as possible.

Patience: Another important, but often unnoticed, factor. Be patient while managing your credit score. A credit score won’t go up exponentially all of a sudden. It does take some time to repair your credit score. After all, a Credit score doesn’t go bad at once. It takes months for our credit score to be affected negatively. In the same way, improving your credit score will take some time too. You will need to be patient while dealing with the whole ordeal. Comprehend that the whole process will not be easy. But always make sure to be patient and pay your debts on time. You can also opt to pay your debt early, if possible.

Final Verdict

The credit score of the UAE is prepared by the AL Etihad Credit Bureau. It started in the year 2010 by the Federal government of the UAE. The lowest credit score you can get is 300 and the highest being 900. The low score indicates that you are a high-risk customer while the high credit score indicates you as a trustworthy customer.

The credit score is calculated with the same process as a credit report. A credit report can highlight your outstanding or missed payments and your liabilities. Meanwhile, the credit score indicates the risk factor involved with you as a customer.

Missing phone bills, maxed-out cards, bouncing cheques will affect your credit score negatively.

Bottom line is that regularly missed out payments can take a serious toll on your credit score. Follow the above steps carefully, if you want to avoid or improve your bad credit score. Also, if you are interested in getting a personal loan in the future, you can check the personal loan by using the personal loan calculator.