Beginning next month, banks lending money for loans will now be able to look into applicants credit scores to ensure that their credit report is acceptable and that they’ve not incurred an unacceptable amount of debt while not being able to make their regular payments on other loans and credit cards.
Those who might be seeking out a loan will also have the newly available option to purchase a copy of a report of their own credit, so they can see that the points in the report, which is held and released by Al Etihad Credit Bureau, is indeed correct.
Once the bureau begins operations, borrowers will have to go to the office to register and then they will be able to buy their reports. The fee is nominal and is not meant for profit, but is necessary so the bureau can cover all costs and function properly.
The bureau will also offer advice and pamphlets on how to maintain a good credit score and why it’s so important, once it begins its operations.
The introduction of this new system is expected to be a smooth transition, as staff members at the various banks in the UAE have been trained and offered support on how the new system will function and how to explain to their customers about how their credit score can affect them.
By the end of next year, a credit scoring system will be introduced in order to gauge an applying borrower’s credibility of paying back loans – similar systems are used in many other countries, but have not been put in use in the UAE as of yet. It’s simple, the better your score, the better chances you have of getting approved for a loan.
As of now, the reports are only intended to cover the individuals credit history in the UAE, so there will be no information about any debt in other countries. This means that for expats just moving to the country to work, they may have to wait several months to establish their new credit score before being able to even have a report on them.
Overall, the bureau is expected to be very beneficial to the UAE’s economy in that it will set a standard for borrowing, all while providing necessary information to both banks and those they’ll be lending too. Later on, credit reports for the commercial market will be made available and are expiated later on in the year.