Dubai: For Dh110, residents can get their full credit history in Dubai, allowing good borrowers to demand better rates, according to Emirates Credit Information Company (Emcredit).
Expatriates can take the report back to their home country or, in case of migration, to a third country, allowing one's creditworthiness here to act as a financial passport elsewhere.
"Many banks in the past had no tools to differentiate between good and bad borrowers. Now each individual can get his credit history report that can act as an asset, a sort of ‘reputational collateral' that he can present to creditors when he needs to borrow money," Zayed Al Kamhawi, Chief Business Officer of Emcredit, said. Emcredit, formed in 2006, became Dubai's official credit bureau last month through a decree that mandates all banks and non-banks operating in Dubai to provide credit information to the agency.
Huge database
Up to 16,000 individual credit records are "pulled" per month from Emcredit's database by banks and non-banks — but Al Kamhawi assured disclosure of individual credit history only happens with the concerned person's written consent. "Correct information benefits everyone," he said.
Al Kamhawi said by making individual credit history transparent, lenders may instantly look at payment histories of applicants and curb a toxic trend in which people in debt are given money, which has often led many to jail or to abscond with a trail of debts.
"Avoidable things happen to people not by accident, but as a result of past behaviour," Al Kamhawi said. "A record of an individual's past payment behaviour is an accurate indicator, rather than just the amount of salary or the name of the employer," he said.
According to Emirates Money, an arm of Emirates NBD, due to vague records, half of loan applications from small and medium enterprises are turned down. Al Kamhawi said individuals are protected against identity fraud under data protection laws of the Dubai International Financial Centre, under which Emcredit operates.
When a dispute regarding credit information arises, an individual signs a form highlighting the point of dispute and submits it to Emcredit, which then gives it to the data source for correction or updating, he said.
In developed economies, one's credit standing becomes his passport to the banks' loan desks. In practice, it helps good borrowers leverage their record for favourable terms, he said. With ready access to individual credit history, he said banks will think twice before giving a credit card or a loan that may send a borrower into a debt trap or behind bars.
According to Dubai Police, between October 2009 and March 2010, about 4,800 people were involved in bounced-cheque cases and one in five inmates in Dubai prisons is spending jail time due to bounced cheques.
Emcredit holds more than nine million consumer identification records and counts several local banks as well as real estate companies as member-subscribers.
To get your credit report, call: 800-EMCREDIT
(3627 3348)
