• What is the impact of credit score on your future applications?

    Many of us actually don't know what a credit score is, its impact on our credit applications and how it works. It often happens that a person comes to know about credit score or credit report only when he/she opts for major purchases such as a home or a high end-car, and applies for home loan, car loan or personal loan.

    Now, what is credit score?

    A credit report is primarily a record of your credit history. It includes all the credits you have taken so far from various institutions. The score carries an overall impression of you as a borrower and the risk involved in lending you money. In the UAE, credit reports are prepared and generated by Al Etihad Credit Bureau. Al Etihad Credit Bureau is a government institution established by the UAE Government to help banks and financial institutions providing them information about companies and individuals based in the UAE. Based on credit information provided by Al Etihad Credit Bureau, these financial institutions may either approve or reject your loan application. Above all, credit reports are provided to credit institutions to help them evaluate and approve loan applications

    A credit report usually covers the following:

    • Your current and previous credit reports.
    • Payment history over last 24 months
    • Payment defaults, if any.
    • Payment overdue, if any.

    ADCB (Al Etihad Credit Bureau) usually update credit reports within 30 days. Companies and individuals can purchase their credit report by visiting Al Etihad Bureau Customer Service in Abu Dhabi and Dubai. In order to get a copy of your credit report in the UAE, you need to submit a filled in application form followed by the copy of your Passport, Emirates ID Card and a fee of AED 110.

    Now, why is having a copy of your current credit report is so important? It is because of the powerful impact it has on your future loan applications.

    Impact of credit score on your future credit applications

    If you are planning to borrow credits, it is important you know your credit score. Because, credit score is one the major determining criteria based on which banks or other credit providers either approve or reject your request for credit/ loan application.

    There are two ways your current credit score can exert its impact on your on future loan applications – positively and negatively. Credit scores are of two types – good credit score and bad credit score. A good credit can smoothen the process of receiving credit while a bad credit score can cut down the possibilities of the same.

    Now, what is a good credit score? You can have a good credit score by returning your debts on time, having a mixture of secured and unsecured debts, closing all your unused credit cards and overdrafts, and resolving all financial disputes lying against your name. Banks will use your credit report to determine whether you qualify for credit or not, and if yes, how much interest rate it would charge from you. If your credit score is good, you would receive a better deal from your lender. You may receive lower interest rate, as you credit report establish you as a low risk individual.

    You can also read How to build a good credit score

    On the other hand, a bad credit refers to low credit score. A person who has a bad credit score is considered as a risky individual who is overturned and dependent on credits. Therefore, banks or any other financial institutions normally don’t want to lend credit to such individuals considering that the risk involved in returning the credit is very high. After analyzing their past credit history, they think that borrowers with bad credit may miss loan repayment or indulge in defaulting which may affect the lender later. Multiple loans & credit cards, delayed payment of debts, skipping loan EMIs, increased credit limit, payment defaulting are some of the activities that may affect your credit score negatively.


    Towards the end of this year, the UAE residents are to receive their credit reports online. It is expected that online service will be launched in the fourth quarter of this year. Customers will be able to access their credit reports immediately after submitting their IDs and other required documents. Given that credit report plays a major role in loan application process, it’s important you get a copy of your credit report. Credit reports help you understand your debt levels and have a clearer picture of your financial obligations. Once, you know your credit score, it becomes easy for you to plan for your borrowings.

    So, before you apply for any credit in the UAE, know your credit score. Don’t apply for any credit, if you know that your credit score is not satisfactory. Your application for credit may be rejected. The higher the score is, the chances are more that your loan application is reviewed and approved faster. However, the choice of approving or rejecting your loan lies with your bank, Al Etihad Credit Bureau does not play any role here. But, based on the credit report submitted by Al Etihad Credit Bureau, bank takes it call as to approve or reject.

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