A credit score is a number between 300 and 900 that evaluates how trustworthy you are with credit. A higher score increases your chances of loan approval and qualifying for lower interest rates. Credit scores are determined using formulas and algorithms. While these methods can vary among credit bureaus, they generally assess similar factors including debt levels, payment history, types of credit accounts, credit utilization, and the length of your credit history.
According to the Al Etihad Credit Bureau (AECB), a score above 680 is deemed favorable in Dubai. On the other hand, a score below 620 is considered unfavorable and it may be difficult obtaining a mortgage.
Here is a breakdown to determine the status of your credit score.
Above 731 : Excellent
680 – 730 : Good
620 – 679 : Fair
300 – 619 : Bad
It’s crucial to understand that each lender sets its own standards for scores, and these criteria can vary based on the specific mortgage product you’re interested in. Therefore, it’s advisable to inquire directly with each lender about their credit score requirements when you’re considering different options.
What impact does a credit score have on Mortgage application?
When you apply for a mortgage, your credit score is really important. Lenders look at it to see how risky it might be to lend you money. If you have a good credit history, you’re more likely to get approved for a mortgage with a lower interest rate. But if your credit score is lower, it could be harder to get approved, and if you do get approved, you might have to pay higher interest rates. So, it’s really important to keep your credit in good shape if you want to get a good deal on a mortgage.
How to check or access your credit score
You can access your credit information from Al Etihad Credit Bureau by visiting their official website or using their mobile app. They offer three options:
Credit Report and Score : AED 100 + VAT
Credit Report : AED 80 + VAT
Credit Score : AED 30 + VAT
It’s recommended to request the full report with the score so you have comprehensive details about your credit history.
How to Improve your Credit Score
Here are some essential tips for managing your credit and improving your chances of securing a mortgage:
1. Review Your AECB Report Carefully: Always check your credit report from Al Etihad Credit Bureau (AECB) for any errors. If you find mistakes, contact the institution to correct them promptly. AECB is available to assist with any disputed records.
2. Make Timely Payments: Paying bills on time demonstrates financial responsibility to AECB, which strengthens your profile for mortgage applications.
3. Avoid Bounced Cheques: A bounced cheque can negatively impact your credit report for up to five years. It’s crucial to avoid these instances as they can affect your ability to secure mortgage approval.
4. Manage Credit Cards Wisely: Keeping credit card usage below the maximum limit and reducing overall credit card limits can improve your credit history. This, in turn, boosts your credit score and enhances your mortgage eligibility.
5. Understand Credit Score Impact: Your credit score is closely tied to your ability to secure a better mortgage. A good aecb credit score increases the likelihood of getting better mortgage terms, while a poor score can make approval more challenging and result in higher interest rates.
By focusing on these steps to improve your credit history, you’ll increase your chances of securing a mortgage with favorable terms in Dubai. Understanding how credit scores influence mortgage approvals is crucial for managing your financial future effectively.
Contact us today to learn more.
