Missed payments in the UAE? Hidden costs that can damage your credit score

Dubai: It’s easy to miss a payment, whether it’s for rent, a phone bill, or an old bank account you’ve forgotten about. Life gets busy, and small oversights can slip through. But when they happen often, they can do serious damage to your credit score.

Your credit score is not just a number, it shapes your financial future. A high score can help you secure loans, rent or buy a home more easily, access better interest rates, and get approved for credit cards or car finance.

If your score is low, it is not the end of the road. By understanding what impacts your score both the obvious and hidden factors, you can start rebuilding and strengthening your financial foundation in the UAE.

Missed payments, maxed-out cards and bounced cheques can hurt your uae credit score

Late or missed payments on credit cards, loans, utility bills (like DEWA or SEWA), and postpaid mobile plans (such as Etisalat and Du) are reported to the Al Etihad Credit Bureau (AECB). According to UAE-based financial coach Jay Adrian Tolentino, “even one missed payment can damage your score if it goes unpaid for more than 30 days.”

Using too much of your credit card is another major red flag. “Using more than 30 per cent to 40 per cent of your credit limit tells the system that you're relying too much on credit, which lowers your rating,” he explained.

Bounced cheques, including rental cheques, security deposits, or post-dated loan payments are also reported negatively. “A bounced cheque is still a legal offence in the UAE,” Jay added. Rental cheques are especially risky after job loss, as they can escalate quickly into legal cases.

Court judgments stemming from unpaid debts or rental issues carry some of the most serious consequences for your credit score.

Cancelling old credit cards may seem like a responsible move, but it can hurt your score by reducing your available credit and shortening your credit history. Dormant accounts or overdrafts with small unpaid balances can also become overdue without you realising it.

Buy now, pay later (BNPL) platforms

For those who frequently indulge in retail therapy and rely on 'Buy Now, Pay Later' (BNPL) platforms like Tabby or Tamara, it’s important to know that these services are increasingly tied to the formal credit system. “Missing a payment could impact your credit score, even if the purchase was interest-free, if your BNPL provider reports it to AECB,” he explained.

Five hidden traps that indirectly damage your score

Some actions do not directly affect your score but can lead to legal or financial trouble that does.

1. Unpaid parking and traffic fines - While unpaid parking or traffic fines don’t immediately impact your credit score, they can block vehicle registration. “If you default on a car loan or the issue escalates to a legal case, it can show up in your credit report,” said Jay.

2. Failing to update KYC and contact information – Failing to update your Emirates ID or contact details with service providers can result in missed bills. “Letting your Emirates ID expire can delay services like car registration or phone contracts, which can lead to missed payments,” he said.

3. Ignoring insurance premiums - Skipping insurance premiums tied to car loans or mortgages violates contract terms. “This can result in the lender flagging the account or escalating it legally,” Jay explained.

4. Unpaid service charges - Homeowners who ignore service charges from developers or owners’ associations risk legal action. If the matter reaches court, it will negatively impact your credit score.

5. Dormant bank accounts - Neglected accounts can accumulate fees over time. If unpaid, these balances may become overdue and affect your report.

Overlooked risks that can lead to credit trouble

Some services are not directly tied to your credit history but if left unpaid, they can be handed over to collections and reported to the AECB.

Gym memberships - Gym memberships don’t directly affect your credit score. “But if you cancel your contract without settling and it gets handed to a collection agency, that agency can report it to AECB,”

Internet or mobile contracts - Internet or mobile contract exit fees that go unpaid can be sent to collections, especially if you move out of the country or switch providers without closing properly. Moving out without clearing all bills such as e&, du, or Dewa can leave behind small dues that become reported months later.

Your credit score is your financial CV

“Having a good credit score is more than just a number,” said Tayo Oguntonade, co-founder of BrickzWithTipz and a property expert and financial educator based in Dubai and the UK.

“Think of it like a financial CV that indicates how trustworthy you are with money. A good credit score is essential for financial wellbeing. It plays a role in everyday life, from getting the best rates on car finance to securing a home loan.”

Al Etihad Credit Bureau scores range from 300 to 900. Oguntonade highlighted that a higher scores indicate lower risk, meaning you may be offered better interest rates, higher credit limits, or approval when others are declined.

Why a strong credit score matters for expats in the UAE

Landlords, telecom companies, insurers, even employers, are beginning to take a resident’s credit history into account when making decisions.

“A good score can make renting a property smoother, negotiating better service terms easier, and accessing preferential financial products possible all without a formal ‘loan’ being part of the conversation,” Sophia Bhatti, CEO Wimbledon Wealth told Gulf News.

In short, your credit score is becoming your financial fingerprint in the UAE. Protecting it is part of protecting your future flexibility, independence, and reputation.

How to build and maintain a good credit score in the UAE

Sophia Bhatti shared practical tips for creating strong financial habits:

• Use credit responsibly – It’s not about taking on debt but showing reliability. Keep at least one active account (like a credit card or telecom contract) and pay on time.

• Stay within your limits – Ideally, use no more than 30 per cent of your available credit.

• Limit new credit applications – Too many credit checks in a short time can temporarily lower your score.

• Check your report – Review your credit report regularly through Al Etihad Credit Bureau to catch and fix any errors.

“Good credit isn’t something you chase when you need it. It’s something you build steadily, like trust, so it’s there when opportunities arise,” she said.

How long does it take to improve your credit score?

Rebuilding your score depends on past issues and your consistency moving forward.

“You can start seeing improvements within 6 to 12 months if you maintain regular on-time payments, reduce outstanding debts, and limit your credit usage,” said Carol Glynn, finance coach and chartered accountant.

For a strong or excellent score, expect to invest up to two years of solid financial behaviour. “Pay all bills on time, pay your full credit card balance, and if possible, reduce credit limits but don’t close accounts, as that may negatively affect your score,” she advised.

A good credit score can secure a stronger financial future

In the UAE, a strong credit score is more than just a number, it’s a key indicator of your financial wellbeing. For expats, it plays a growing role in securing long-term financial stability.

“A good credit score doesn’t just help with getting approved for loans, it influences the interest rates, repayment terms, and credit limits you receive,” said Glynn.

“A higher score can mean significantly lower interest on loans or mortgages, while a lower score may result in higher costs and less favourable terms, even if you’re approved.”

She added that in other countries, credit scores may affect job opportunities or utility connections. “While that’s not yet common in the UAE, residents should understand that as the system matures, these factors may become more relevant, especially if you plan to move abroad.”