190927 credit score
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Dubai: Your credit score affects many areas of your finances, from getting approved for a credit card to the interest rate you will pay on your mortgage, which is why it’s important to understand the number and how it is calculated, especially if you are looking to rebuild a score that is low.

If you find yourself chronically late paying your bills or defaulting on loans, you may be damaging your credit rating – and that can raise the interest rates you pay and limit your ability to qualify for new credit.

However, the damage done to your credit score is not irreparable. Let’s first discuss what truly is your credit score made up of, as in how it is calculated and what are the factors influencing it, and then later we can discuss some steps you can take to rebuild your credit score.

Note that credit scoring is calculated differently in each country. So, if you’re new in the UAE and wondering how to calculate your credit score, this article helps. But before that, let’s take a look at what exactly is this score and what it can be used for.

What is a credit score?
Credit score is a three-digit score assigned to an individual that plays an important role in deciding one’s eligibility for a loan or credit card at the bank.


Workings behind your credit score

The Al Etihad Credit Bureau (AECB), which provides the credit report that includes the credit score of an individual, collects financial information of an individual from various sources and generates a report by analysing the details.

AECB gathers the information of an individual from banks, financial institutions, and telecom companies and forms a single report. Some banks provide their customers’ information once in a while, whereas others like the Union National Bank follow the daily data submission approach.

The report consists of the relevant financial information like the number of loans, credit cards, how frequent the credit instalments are being paid, due dates and delayed payments, skipped payments, utilisation of the credit limit, number of debit cards held, bounced cheques, etc.

Along with the summary of existing loans, it also lists out previous loans and details of the number of loans applied for and the application status i.e. accepted or rejected by the banks. All these details gathered in the report will generate a score that is popularly known as the credit score.

What is a good credit score? What your credit score says about your credit worthiness
The credit score ranges from 300 to 900. Higher the score, the higher the probability of getting a loan approved. Usually, if the credit score is above 700, it is considered a good score. If it is below 700, then the individual must improve it.

A score of 300-540 is categorised ‘poor’, when money is either lent to you at ‘very high risk’, or not lent at all; a score of 541-650 is still considered ‘bad’ and ‘high risk’; a score of 651-710 falls under a ‘fair’ and ‘medium risk’ category; whereas, a score in the range of 711-745 is categorised ‘good’ and ‘low risk’.

However, a 746-900 score puts you at ‘very low risk’ of funds being lent to you and puts your debt profile under an ‘excellent’ category. Keep in mind lower the score, the higher the risk, and higher the interest rate incurred on your loans and raises the chances of your loan application being rejected by banks.
credit card
Ensure that you pay off the card balance in full at the end of each month. Image Credit: Stock photo

How is credit score calculated in the UAE?

Now that you know what credit score is and how it is used, let’s now learn how it’s calculated. These are the major factors considered by AECB for giving a credit score to an individual; knowing how these factors weigh on your credit score can help you prioritise how to improve or rebuild your credit history:

Your bill payment history makes up 35 per cent of your credit score

If you missed making a bill payment on time, it could impact your credit score negatively as it is the major determining factor for defining your credit score. Bill payment history occupies the weightage of around 35 per cent of the score – proving how crucial it is to pay on time.

Level of your personal credit card debt has a 30 per cent weightage

The level of debt signifies the amount you have to repay pertaining to your credit card bill. Basically, it is the difference between the credit card limit and balance. Simply put, if your credit card limit exhausts frequently, it will have an impact on your score. It determines around 30 per cent of total credit score.

If you are especially looking to rebuild your credit history from a really low credit score, the weightage of your bill payment history and level of your debt proves why you should focus on these two factors first.

Age of your personal credit history makes up 15 per cent of your credit score

Credit history age refers to how long you have been using credit instruments i.e. bank account, credit card, etc. From the average age of every account you have to your oldest account, everything is taken into account to determine the age of credit history. It carries around 15 per cent of the total score.

Type of credit account comprises 10 per cent of your credit score

The type of credit account an individual has and how well they manage them also impacts their credit score. The better you manage both these accounts, the higher your score. Around 10 per cent of the total score depends on this factor.

What are the different types of credit accounts a person can have?
Two types of credit accounts can be owned by a person in the UAE, namely instalment loans and revolving accounts.

A revolving account gives the borrower a maximum credit limit without any maturity date. An instalment loan, on the other hand, has fixed regular payments with a maturity date.

Number of credit inquiries has a weightage of 10 per cent of your credit score

Similar to the type of credit account, the number of inquiries made, particularly pertaining to any credit or loan-related transactions, also occupies the weightage of around 10 per cent of the score. Keep in mind that a couple of credit inquiries wouldn’t impact the score, but several inquiries can adversely impact it.

Other than the aforementioned ones, there are numerous other factors such as age, nationality, etc. that contribute to determining the score. Also, it is a ‘dynamic’ score, which means it can change from time to time, depending on these factors.

Damage control: Some steps you can take to rebuild your credit score

The first step in repairing your credit and making up lost ground is to make sure your credit report contains no mistakes. Your credit score is based on this report, so fix any errors to avoid being penalised. Next, alert the AECB credit reporting bureau and the lender that reported the incorrect information.

Your credit report calls out missed or late payments from billers such as credit cards, mortgage companies and loans, and those lower your score. Bring all your accounts current by covering those back payments as quickly as possible. If you have trouble making payments, contact your creditors and ask whether they will consider working with you to adjust your payment plan.

On-time payments are one of the biggest factors in calculating your credit score. If you have trouble remembering to pay bills on time, schedule automatic deductions with your bank for regular expenses, such as car loans, and set up reminders for credit card payment due dates.

If you don’t have much credit history, a secured credit card can help build it. A secured card typically requires a cash deposit that serves as the credit line. You use the secured card just as you would a traditional card. But if you default on paying your bills, the issuer can keep the portion of the deposit needed to repay what you owe. A good track record on a secured line of credit can help you get an unsecured credit card down the road.


In general, a longer history means a higher score. Closing old accounts may have a negative impact, since scorers consider the age of your oldest account, as well as the average age across accounts. If you have an old account you don’t use often, you may need to use the card occasionally to prevent the issuer from closing the account - just be sure to pay the bill on time. And make sure none of the accounts charge annual fees.

Credit inquiries lower your credit score, so avoid making many inquiries about new loans or lines of credit. This includes opening a new store card to get a discount on a purchase. If you do need to shop for a new loan, do your comparison shopping within a 14-day period. That way, raters may count the inquiries as a single event. Rest assured, though, that checking your own score doesn’t count against you.