Revealed: 5 ways to improve your credit report in UAE

For now, it is not mandatory for banks in the UAE to use the credit reports issued by Al Etihad Credit Bureau (AECB) when it comes to deciding on a customer’s loan application.

But going forward, banks will certainly look at repayment history of the applicant and hence it is necessary that you – UAE resident – need to make sure that you have a clean credit record. Those who diligently pay off their debt will, in future, stand to gain in terms of lower interest rates and a higher credit limit.

“It’s one important document that will set your credit reports provide a snapshot of your credit accounts, repayment record and how well you are coping with your finances,” Shahram Safai, Partner, Afridi & Angell, told Emirates 24|7.

“Lenders use this report, along with information on your application, to decide whether to offer you credit, by calculating a credit score for your application. They may also use it to decide how much to lend and to charge.”

According to Safai, consumers can generally improve their credit score by doing the following:

* Paying their bills on time

* Reducing the amount of outstanding debt they owe through a well-calculated payment plan

* Having a solid repayment record, which refines the credit history

* Avoiding negative elements such as delinquencies, collections, bankruptcies, unpaid tax liens or hard inquiries, as they demonstrate the person as a poor credit risk

* Having a diverse set of account types, as long as it is managed effectively, otherwise this will worsen your score

AECB has said before that it will start issuing credit reports to institutions from September, but no date has been given on when individuals can ask for the report.

Documents required to obtain credit report

For an individual to obtain his/her credit report, the following documents are required:

- original Emirates ID card of the applicant

- passport copy of the applicant.

In case of authorization, one must bring

* copy of valid Emirates ID card and passport of the customer (owner of the credit report)

* Original Emirates ID card of the authorizes person to receive the credit report

* Original notarized power of attorney with the authority to obtain credit facilities or a notarized authorization letter from the bank

* Credit report consent form (individual) duly filled in and the documents as mentioned above duly attached

Why credit bureau will help you?

According to AECB, the credit report will benefit consumers in terms of lowering the costs of credit for a good borrower, limiting credit risk at a national level, will encourage residents to develop appropriate debt management and consumers that practice good debt management being rewarded with more favourable lending terms, making the process of gaining approval for borrowing (loans, credit card etc) will be more transparent and accurate and individuals will be able to avail financial services from financial institutions that they didn't have any relations before.

Your consent is necessary

Individuals have been given the right to stop banks or financial institutions from checking their credit history.

“Your credit report can only be accessed when you provide consent,” AECB says.

“Therefore, if you don’t want your credit report to be accessed you need to refuse to sign the consent. Please note that declining to provide consent might affect your opportunity to receive credit from credit providers and financial institutions,” it adds.

Follow Emirates 24|7 on Google News.