UAE credit score: Get out of red zone in just 6 months

Dubai: Consumers who default on payments will soon be able to rebuild their credit scores much faster as the Etihad Credit Bureau prepares to launch a redesigned version of the UAE’s credit scoring system.

Currently, individuals who default on loans or credit cards can remain in the “red zone” for up to 24 months before their scores begin to recover. Under the new system, scheduled for launch before mid-2026, that recovery period could shorten to as little as six months, depending on improved payment behaviour.

“This is a major shift from the old model,” said Marwan Ahmad Lutfi, Director General of Etihad Credit Bureau. “If you were a defaulter in the past, you could be locked into that category for two years even after showing good behaviour. In the new score, we want to make it more dynamic and reflective of the UAE market. Getting out of the red zone is going to become much faster.”

Faster recovery and better behaviour tracking

Lutfi said the upgraded scoring algorithm is designed to encourage positive financial behaviour rather than penalise borrowers for prolonged periods.

“We don’t believe that penalising someone for years is the way to improve financial behaviour,” he said. “You will still be penalised for missed payments, but the system will now recognise improved conduct much sooner.”

The new scoring model will be more adaptive, with the bureau monitoring and fine-tuning its algorithms every quarter, rather than annually. This will allow for faster adjustments as economic trends and consumer payment patterns evolve.

A key feature of the upcoming Version 3 of the credit score is the inclusion of new consumer segments who were previously outside the formal banking system. The updated model will utilise alternative data, including utility payments, rent, and telecommunications records, to generate scores for individuals without existing loans or credit cards.

“The UAE attracts a lot of new residents every year. Not everyone comes here and immediately opens a credit card or takes out a loan,” Lutfi explained. “But with access to data from utilities, telecoms, and other service providers, we can now build a score for them even before they enter the banking sector. This new segment, which we call ‘new to credit,’ will benefit a large number of consumers.”

The bureau is expanding its data segmentation, allowing for a more precise assessment of financial behaviour across different demographics.

Another key development is that the new model is being built entirely in-house, giving the bureau full control over how scores are developed and maintained. Lutfi said this approach ensures the system can adapt faster to changing local conditions and regulatory feedback.

“We are building the score from the ground up, working closely with the Central Bank of the UAE and the banking community,” he said. “Having full control means we can continuously improve and correct the algorithm if needed, rather than relying on external vendors. We can make quarterly adjustments and refine the score as market trends change.”

This flexibility is expected to make the UAE’s scoring system one of the most responsive in the region, allowing for real-time improvements and greater transparency in measuring creditworthiness.

While the bureau has historically operated as a business-to-business platform, Lutfi said there is a growing focus on making credit information more accessible and easier for consumers to understand.

In previous years, individuals typically requested their credit reports only after being rejected for a loan or card. The bureau now wants to change that behaviour by encouraging people to check their reports regularly to stay financially healthy.

“We want to change the mindset,” Lutfi said. Consumers should not only check their report after a rejection. They should monitor it the same way they would visit a doctor or dentist for a check-up, to stay on top of their financial health and plan for the future.”

The introduction of Version 3 marks a major step in the UAE’s efforts to modernise credit infrastructure and expand financial inclusion. By incorporating new data sources and faster score updates, the system aims to create a more accurate reflection of real-world financial behaviour.

Lutfi said the ultimate goal is to make credit scoring more predictive and fair. “The idea is to continuously adapt and make the score more relevant to people’s real financial lives,” he said. “We want it to help consumers grow, not hold them back.”

The new credit score system is currently in its testing phase and is expected to roll out before mid-2026, in coordination with the Central Bank and UAE lenders. Once launched, it will mark the most comprehensive update to the country’s credit ecosystem since the bureau’s inception.