From home loans and personal loans to overdrafts and credit cards, having a high credit score could allow you to borrow more money and get a better interest rate. Having a low credit score, on the other hand, could mean you’re more likely to be rejected for finance altogether.
It’s not the only thing that matters in getting approved for finance, but it’s important to be aware of your score and how to improve it.
Your credit score is a number, between 300 and 900, calculated by the AECB. The higher your score, the better.
Banks, finance companies, and even your mobile phone contract provider, look at your credit score when you apply for a loan or a contracted service. They use it to predict how well you’ll be able to meet regular payment commitments over the next 12 months.
Your credit report is the document that contains your credit score, along with all your financial information. This includes details of any debts, lines of credit and your bounced cheque history.
It also includes your monthly payment history for things like utility bills and your phone contract over the last 5 years.
Using a credit card in the right way can help improve your credit worthiness. But be careful – if you’re late for your payments or go over your limit, it could have the opposite effect.
Here are the key things to know:
Explore: How credit cards work
When you apply for a home loan or any other type of finance, your credit report will be checked by the lender.
If you’re making too many applications and getting rejected frequently it looks bad on your credit report, and it could lower your score.
Check your credit report for any errors or missing information. This includes even the most obvious details like your date of birth, your Emirates ID or your address history – a small error could be making a big difference.
When you apply for joint borrowing, such as a home loan with your partner, your credit profile will be linked to theirs.
If you’re trying to improve your score, consider asking your partner to do the same to help your chances of a successful application.
If you have a joint current account, how you both use it will affect both of your credit scores. For example, if your partner spends money and takes you into an unarranged overdraft, it could be recorded on both your credit reports.
Explore: Opening a joint current account
Depending on what changes you make, it can take a while for them to impact your credit score.
Updating your details on your credit report could take a few weeks, but it might take several months of using a credit card smartly to affect your score.
Remember that the positive changes you make towards improving your credit score will benefit your broader financial wellbeing too.
Explore: Financial wellbeing