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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

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