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WILL CREDIT ISSUES HINDER A LOAN REQUEST? Q I want to take out a personal loan. Five years ago I defaulted on repayment of my credit cards, which I settled gradually. Will this show in my credit history and stop me from getting the loan? Should I check before applying for a new loan?
A Indeed, it would be prudent to check your credit report before requesting a loan as it could have a bearing on your creditworthiness and financial affairs. It will certainly help to identify where your credit rating is positioned and embolden you to take necessary steps to offset the red dots, if any, prior to applying for the loan.
Since you mention that around five years back you faced default repayment issues, which you’ve gradually settled, it would not be reflected by Al Etihad Credit Bureau (AECB), the UAE’s official credit bureau, which provides a credit report with a record of current and previous payment activities for the past 24 months only. If there were any outstanding amount or payment or cheque defaults during that particular period they would be underlined. This report records your current complete debt levels and financial obligations, including personal, credit cards, car or mortgage. It will display the outstanding amount, credit limits on the cards and the repayment performance, which certainly supports banks to make a decision on the application. The bank has centralised access to all the information that the other banks have provided regarding the individual applicant. This will allow the bank to check whether the borrower has reached the debt-burden ratio in the calculation of the annual income or not. Lastly, the bank decides whether to approve the loan or assist in fixing a rate depending on individual lending and credit criteria.
However, this report empowers a stronger approach to planning for future borrowing and financial management, and ensures you uphold a good repayment profile to improve future credit prospects.
To obtain the credit report copy, you need to submit the AECB credit form along with your Emirates ID and a passport copy. The fee for the service is Dh110.
DHIREN GUPTA, managing director of 4C Mortgage Consultancy, is a financial expert