Al Etihad Credit Bureau (AECB) has begun to issue Commercial Credit Scores to businesses in the UAE.
Companies can now obtain their Credit Scores by visiting the Bureau’s customer service centres in Abu Dhabi and Dubai, with original valid Emirates ID card of the Establishment’s owner or the company’s authorised signatory, an original valid trade license of the company, the original Articles of Association of the Company and a valid Email Address. A commercial credit report with credit score is price at Dh220.
The credit score ranges from 300 to 900 and measures how likely an organisation is to default within the next 12 months. The Commercial Credit Score is calculated using information from various sources, like banks, finance companies and telecom companies.
“The launch of the Commercial Credit Score will help banks and other commercial lenders to assess the risk from the time of application throughout the entire lending relationship,” said Marwan Ahmad Lutfi, CEO of Al Etihad Credit Bureau.
According to international best practices, a good Commercial Credit Score assists small and medium enterprises in accessing the credit market because the analytic and predictive score indicates the likelihood of future default and the effectiveness of current management.
Bankers say, over time, customers with better credit scores will get access to better pricing while it will encourage prudent lending decisions across the financial services industry, which will further contribute to the strength of the UAE’s economy and financial system.
In April this year AECB had launched individual credit scores, following which a number of banks have been using these scores in key underwriting decisions including pricing of the loans.
Across the world, benefits from credit scores for individuals and companies range from better negotiating power in pricing of loans and banking products to lower insurance premiums, better mortgage rates, rental benefits and potential discounts based on financial discipline.
The whole concept of credit score is expected to instill better credit culture and financial discipline. Bankers expect the credit scoring system is expected to reduce loan impairments.