HOW DO I MAINTAIN A GOOD CREDIT SCORE?
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