From Average to Exceptional: Mastering the Art of Achieving a Good Credit Score in the UAE
In the UAE, credit scores range from 300 to 900, and a higher credit score generally indicates better creditworthiness. While there is no specific threshold universally defined as a “good” credit score, a score of 700 or above is generally considered favorable and may increase your chances of getting approved for credit and obtaining more favorable terms from lenders.
However, it’s important to note that each lender may have their own criteria and standards for evaluating creditworthiness, so what is considered a good credit score may vary slightly depending on the institution.
Maintaining a good credit score is crucial for accessing credit facilities and obtaining favorable interest rates and terms on loans and credit cards. To achieve and maintain a good credit score in the UAE, consider the following practices:
Make timely payments: Pay your bills and credit card balances on time to demonstrate responsible financial behavior.
Manage credit utilization: Keep your credit card balances and overall credit utilization ratio (the percentage of your available credit that you use) as low as possible. Ideally, try to keep it below 30% to maintain a good credit score.
Maintain a healthy credit history: Maintain a longer credit history, as a well-established credit history can positively impact your credit score. Avoid closing old credit accounts unless necessary.
Diversify credit types: Having a mix of credit types, such as credit cards, loans, or mortgages, can demonstrate your ability to manage different types of credit responsibly.
Limit credit applications: Avoid making multiple credit applications within a short period, as it can negatively impact your credit score. Each credit application typically results in a hard inquiry, which can temporarily lower your score.
Remember that building and maintaining a good credit score takes time and consistent responsible financial habits. It’s also important to regularly monitor your credit report for any errors or discrepancies and take necessary steps to rectify them promptly.
Lastly, it’s important to note that credit scoring models and criteria may vary between different countries and credit bureaus. The information provided here is based on general knowledge up until my last update in September 2021. For specific details and guidance on credit scoring in the UAE, it’s recommended to consult the Al Etihad Credit Bureau or contact them directly.
