What Is the Minimum Credit Score For Credit Cards in UAE?
Credit scores are normally used by banks in processing loan and card applications. Having a good credit score guarantees that you can easily apply for a loan or card with an added advantage of preferential benefits and rates but a lower credit score puts one at risk of being bounced.
What is a credit score?
A credit score is a three digit number that indicates whether or not one is a credit worthy candidate and is a major factor considered when determining a credit-card-user’s credit limit. Credit cards and loans are then issued to customers depending on their credit score value.
Credit scores reflect a customer’s debt re-payment behavior, associated risks and defaults if there are any pending.
The credit score value normally ranges from 300-900, a lower number (nearing 300) indicates a higher risk of one not being compliant and quite not credit worthy well as numbers tending to 900 show that one is a good credit card user.
Credit scores are calculated using information from different sources like banks, financial companies, telecommunication companies, and as time goes on government entities, utilities, courts rentals and leasing companies also provide information that can be used in determining of credit scores.
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Credit scores are mostly used by banks and financial institutions in support of decision making on credit products like mortgages, personal or car loans, and many more.
How are credit scores generated?
Credit information from finance companies, government bodies, telecommunication companies, lending institutions and many other sources, is gathered and used in calculating one’s credit score.
In UAE, the Al Etihad Credit Bureau (AECB) aggregates and analyses the collected data to calculate credit scores and produce credit reports which are then made available for individuals and companies.
What Is the Minimum Credit Score For Credit Cards in UAE?
In United Arab Emirates, credit score values ranging from 300-619 are considered poor. Scores from 620-679 are considered to be fair, good scores normally range from 680 to 730 and scores above 730 are considered to be excellent.
There are is no minimum credit score while applying for a credit card in UAE, some credit card issuing facilities do not even mind the applicant’s credit history and basically consider that the applicant earns more than they spend. However loan applications are only granted if the credit score of the customer is 580 and above.
Factors affecting the credit score
- Delay in payments. A person who clears their debts in time is more likely to have a good credit score but if you tend to clear your debts beyond the agreed date of payment, the credit score will significantly reduce.
- Maximum utilization of credit card limits improves on an individual’s credit score but if they do not utilize them, there are high chances that their credit score will drop.
- Number of credit cards. The more credit cards you apply for, the less your credit score value.
How do I increase my credit score?
Maintaining your credit score value at 700 and above can greatly ease your credit card-user experience since good credit score values usually come with advantages such as; – quick and easy credit approvals
- Fully pay your bills. A person’s payment behavior greatly accounts for their credit score value. Normally a provision of 5% on credit card bills is provided for making the payment but paying only the provision amount has a negative effect on one’s credit score.
- Manage your debts. Only apply for loans when it is really necessary in order to reduce on your financial burden and make sure to clear all your high interest loans.
- Minimize on the number of credit cards you apply for. Credit scores tend to decrease when you apply for many cards and loans. It is therefore important for an individual to apply for a minimum number of credit cards and if possible have only one if they are aiming at a good credit score.
- Utilize your credit limit. Many financial providers advise their customers to only use 30% of their credit card limit as this is considered a good practice. If you are the kind who wants to spend more than you earn, then credit cards ought not to be your thing since you will always have a low credit score.
Credit card users should always make an effort in maintaining a good credit score as this would better the services they receive from banks and financial institutions.
They should however note that credit scores are not the only factor considered for loan and credit card eligibility but rather the card issuing facilities also tend to consider and make assessments basing on their own risk profiles and scores.
Why is my credit score not showing numbers?
Usually, generating credit scores requires a minimum amount of credit history and some of the reasons as to why a credit score is not displaying digits are; –
a) Failure to update your credit report in the last twelve months and when there is no credit information in the last twelve months.
b) When you fail to utilize your credit limit in the past twelve months.
c) When you the customer have not made any borrowings yet.
d) When you are a new customer with credit payments less than 6months.
What is a credit report?
A credit report is a document showing a customer’s detailed personal information including your credit history, unpaid debts, bills and bounced cheques.
Is my credit score a permanent value?
No, the credit score changes every time your credit report is updated.