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Q What is a good credit score, and how can I main­tain it? A Al Eti­had Credit Bu­reau (AECB) has launched a con­sumer re­tail bank­ing score, which is ex­clu­sively de­vel­oped for risk cal­cu­la­tion us­ing fac­tual data on a cus­tomer’s past set­tle­ment per­for­mance.

In fact, credit score is con­sid­ered the new tested risk as­sess­ment tool, which plays a key role in a bank’s un­der­writ­ing de­ci­sion. So it is im­por­tant to take the right steps to boost the score by un­der­stand­ing the ba­sics of credit score.

Es­sen­tially, a credit score is a three-digit nu­mer­i­cal ex­pres­sion based on the in­di­vid­ual’s credit file anal­y­sis, which epit­o­mises his/her credit health.

In the UAE, AECB main­tains ev­ery in­di­vid­ual’s credit re­port and clus­ters all the in­for­ma­tion about the credit from di­verse sources. Credit score num­bers are based on the credit re­port sta­tis­tics that en­vi­sion how well you set­tle each of your debt onuses.

Here, the score ranges from 300 to 900, which is cal­cu­lated us­ing nu­mer­ous fac­tors in­clud­ing na­tion­al­ity, age, out­stand­ing bal­ances, credit ex­po­sure and the av­er­age credit age.

The lower score in­di­cates a higher risk and more chances of miss­ing loan or card pay­ments; if the score is above 700, then it is gen­er­ally re­flected as be­ing a healthy credit score. There are steps to boost credit health. Look care­fully at your fi­nan­cial prac­tices and iden­tify where you can im­prove them. Pay on time, even if you can only af­ford to pay the min­i­mum pay­ment; al­ways set­tle on time be­cause it will have a big­ger im­pact on your score. Al­ways re­duce your credit us­age, and with this, you can see a sub­stan­tial in­crease in your credit score.

Keep mod­er­ate bal­ances on your credit cards, and try to avoid in­ter­est pay­ment. And lastly ap­ply for credit only when nec­es­sary; a re­dun­dant credit cheque can ham­per your credit per­for­mance. Also, to achieve the tar­get score you should try to re­duce your bor­row­ing across fi­nan­cial in­sti­tu­tions in the UAE.

DHIREN GUPTA man­ag­ing di­rec­tor of 4C Mort­gage Con­sul­tancy, is a fi­nan­cial ex­pert

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