Poor credit history is no barrier to loans

Banks have final call, says Al Etihad Credit Bureau

ABU DHABI // Borrowers with a poor credit history could still have access to financial products because the banks will make the final decision, says Al Etihad Credit Bureau. UAE consumers can now access their credit score – a measure of creditworthiness – after the bureau launched its credit scoring system yesterday.

Banks will use credit scores to assess loan applications, but credit scores will not be considered in isolation.

Marwan Lutfi, the bureau’s chief executive, said a high score or a low score did not really mean anything. The final decision would depend on the bank’s appetite for risk.

On Sunday, he said: “We want to make sure those who are good payers get rewarded and those who might not be very disciplined when it comes to payment behaviours will start realigning themselves.” The bureau hopes that good credit scores would help borrowers to attain lower interest rates.

The credit score ranges be- tween 300 and 900. The higher the score, the better.

The credit score is calculated by using 2,000 factors such as nationality, age, outstanding balances and the number of loans.

It is similar to methodologies used by many foreign credit companies.

It is likely, however, that the algorithm that is used to calculate the score has been tailored for the UAE because the demographics of individual countries, such as the UK or United States, are different.

The best way to boost a credit score is to pay all bills on time, not just loan instalments or credit card repayments.

Consumers can access their credit score by visiting the bureau’s customer service centres and providing their Emirates ID, passport copy and an email address.

A standard credit report for individuals or establishments costs Dh100, while a document with a credit score costs an additional Dh50.

A credit score for an individual, with no report, costs Dh60. Standard reports for companies are Dh180, or Dh220 with a credit score.

The bureau has a section on its website, www.aecb.gov.ae, dedicated to the new system.