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Mon 17 Apr 2017 10:44 AM

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New UAE credit scoring system to gauge likelihood of loan default

System is calculated using information from various sources, such as banks, finance companies and telecom companies

New UAE credit scoring system to gauge likelihood of loan default
Lutfi says consumers still misunderstand the purpose of the credit bureau, even blaming it for their loan application rejection because financial institutions are using its data to predict the liklihood of default.

Al Etihad Credit Bureau (AECB) has launched a credit scoring system for UAE residents that will provide a gauge of how likely a consumer is to default within 12 months.

The credit score is a three digit number that ranges from 300 to 900 and is calculated using information from various sources, such as banks, finance companies and telecom companies.

The score changes according to credit payment behaviour; a low score indicates a higher risk whereas a higher score indicates a lower risk.

People can obtain their credit score by visiting the AECB’s customer service centres in Abu Dhabi and Dubai and providing their original valid Emirates ID card and passport.

“The launch of the Credit Score is in line with AECB’s ongoing commitment to adopt the highest international standards in credit reporting and enhancing the UAE financial infrastructure,” said Marwan Ahmad Lutfi, CEO of AECB.

International best practice shows that a high credit score can give borrowers more negotiating power when applying for a loan or a credit card.

In addition, it often entails lower premium for insurance, better payment terms with landlords and enhanced benefits with telecom and utility firms.

To date, 59 Financial Institutions and Telecommunication Companies have provided their customers’ credit data to the Bureau and 64 Institutions have subscribed to AECB’s credit reporting services.

Credit Reports include personal identity information, details of credit cards, loans and other credit facilities, along with payment and bounced cheque history. AECB began issuing credit reports in 2014.

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Diya Pardasani 3 years ago

Good beginning for AECB. More careful venture in to corporate credit reports can give other international credit bureaus operating in UAE at a very high cost, run for their money. However, they must come up with very careful and meticulous approach to "scoring". It's like a tag on the bearer. High level of speculation can be expected from consumers for "bad scoring".
AECB must carefully investigate, scrutinise the data provided by these institutions. There have been instances where flawed data have put consumers in turmoil with AECB report. Data validation is of prime importance here.