The UAE wants to make it easier for its new residents to tap into the local banking sector and all the services that come with it. However new they may be in the country. Image Credit: Shutterstock

Dubai: A new resident in the UAE can access banking services or take out loans to buy a car much earlier than was the case in the past through a major change in the credit scoring system.

It means that the credit history of the individual who has just taken up residency in the UAE will be made applicable in dealings with the banks, other institutions, etc. This represents a major shift to the status quo, which had seen newcomers find it difficult to fully access banking services or tap other funding needs. More so when it comes to those wanting to launch businesses as soon as they set up a base here.

The Al Etihd Credit Bureau has struck a collaboration with Nova Credit, one of the the world’s leading 'consumer-permissioned' credit bureau, to enable newcomers to use their home country credit history when applying for financial services on arrival to the UAE.

“If these individuals have a good credit history from where they are coming from – the UK, India or the Philippines - why shouldn't they bring that credit rating in as well,” said Marwan Ahmad Lutfi, CEO of Al Etihad Credit Bureau, which is the agency making the changes possible.

“Our new initiative allows us to actually ‘import’ that existing credit information and make it available to the banks who want to onboard these new residents.”

“At least the banks in the UAE will be able to access past credit history, and - hopefully – that will make it easier for them to decide what they want to do with these clients.

“If someone is settling in the UAE from the UK, and has a sound credit rating in the UK, why can’t lenders here have access to that history? Rather than wait for these individuals to build up some fresh track record in the UAE.”

How the new credit history importing works
With Nova Credit coming on board, it facilitates 'real-time, large-scale application approvals' by enabling AECB subscribers, namely UAE-based local and international financial institutions and lenders, access to the translated credit history of new UAE expats. This has to be done upon their approval as part of credit applications.

UAE's expanding new resident base

Any which way one looks at it, the change that will bring about will be far-reaching. The UAE’s resident base has been expanding significantly, as jobs are being created or people wanting to set up a new homestead in the UAE to launch a business or ease their way into retirement.

Categories such as car sales will likely be immediate beneficiaries from the credit history importing. Leading dealerships have been complaining that banks are loath to lend to potential car buyers in the initial months of their residency. And that it all ends up as a loss of sale. “We cannot afford to lose even a single customer due to banks’ reluctance to lend,” said a top official at a leading dealer. “If the past credit performance of these residents becomes instantly available to local banks, it is a game-changer.”

This is exactly what Al Etihad Credit Bureau intends to achieve. “When someone comes into the UAE with a great credit history, what we will do is allow that person to access that through us - provided he gives the consent,” said Lutfi. “In an instant, we give the bank the info to make instant decisions - I would say this is probably the biggest initiative we have this year.”

This is critical for the UAE - everyone is coming in here., If you have good credit history, why not bring it here with you?

- Marwan Ahmad Lutfi of Al Etihad Credit Bureau

Credit history 'flows' both ways

According to Lutfi, the new arrangement on credit history will work both ways. A resident of the UAE can take back his credit rating if he/she decides to move on to a new country of domicile.

“I had a colleague who was resettling and when he wanted to buy a car there, he found himself to have a lower credit rating than his son – because the son had been in that country longer,” said Lutfi. “With the movement of credit history cross-border, we will have all possibilities covered.”

With this collaboration, AECB will be able to better support the thousands of newcomers to the UAE every year seeking access to the financial services they need to get started and thrive in their new home

- Misha Esipov, co-founder and CEO of Nova Credit