With the new credit bureau set up and providing credit reports to both banks and consumers, it is important that each of us knows exactly what to expect, how to ensure we understand how our credit score is affected in the UAE and what to do in case of complications.

Let’s start with the basics – some frequently asked questions.

What is a credit report?

A report of an individual or company’s credit history, prepared by a credit bureau and used by a lender (credit provider) when they are determining a loan or credit applicant’s creditworthiness.

It will include current and historical credit facilities (what you have borrowed), payment history and any overdue payments or defaults.

Who can access credit bureau reports?

Banks, landlords, telecommunications, as well as utilities and insurance companies, will all be able to buy credit bureau reports – subject to written consent from the individual or company in question. If you want to see what is in your report, you can purchase it from Al Etihad Bureau for a fee of AED 110.  Currently there are around 30 institutions currently using the services.

No institution can access your data unless you have given them consent to do so. Some will have consent built into the standard application form for their product; others will provide you with a separate form to sign. You can choose to refuse the credit check by Al Etihad Bureau – but that may affect your chance of getting credit or mean you end up with a higher rate, as you appear more risky without your full credit history being available to a lender.

When can financial institutes or individuals access a credit report?

Al Etihad Credit Bureau began issuing consumer credit reports to all financial institutions that are submitting data to the bureau from the beginning of September.

And it started issuing credit reports to citizens and residents on 12 November, meaning anyone who wants to see how they stack up can visit the bureau’s headquarters in Abu Dhabi on Al Falah Street, or office on Sheikh Zayed Road in Dubai, to get their report.

You will need to show your Emirates ID, passport and pay a AED 110 fee and you should not have to wait any longer than 10 to 15 minutes.

[Related: How much to see what banks say about me?]

The bureau will begin issuing reports on businesses next year, as part of its second phase of credit reporting.  This should help a great deal SMEs to get finance.  There has also been some talk about assessing an SME based on the founder’s credit score.

There is no limit to the number of times an individual or company can access their report.

What information does the report contain?

Credit reports include one’s own or a company’s payment history for the past two years – including payments and defaults, and details of defaults and bounced checks for the past two years – as well as:

  • Identification information, such as passport number or Emirates ID
  • The total outstanding balance of your debt in the UAE
  • The total amount of late and missed payments to all credit providers
  • A summary of active contracts belonging to or related to you  (this could be a mortgage, personal loan, car loan etc – basically anything where you have entered into an agreement with a financial institution to borrow money)
  • A summary of all your contracts – requested, active (live), rejected and closed
  • Details of the payment history for each of those contracts
  • The number of contracts ‘overdue’ by (i.e. you have been behind on payments for) more than 90 days
  • List of all of your applications for credit with lending institutions
  • And, eventually – your credit score.

[Related: How do I read the Al Etihad Bureau credit report?]

What things affect your credit score or report?

Needless to say, people with a poor credit history and/ or excessive debt run the risk of being declined by lenders, which will use the reports to determine whether they have an ability to pay.

Banks will use the information in the reports to determine the rate of interest to apply and whether or not the person even qualifies for credit. Those with a good score may be offered a lower interest rate, as they represent a lower risk.

All credit cards or overdrafts that are not used should be closed – they still count as debt because they have credit levels that are available for you to use.

You probably have credit cards that you don’t even know about, as many lenders will give you a credit card bundled together with a personal loan or a mortgage. Go through your cupboards and drawers to check for any credit cards you do not use and make sure you cancel them.

Which institutions are providing information to the credit bureau?

To begin with, the bureau has only collected information from banks – apparently now more than 95% of an individual’s financial data. Telecommunications companies Etisalat and Du will be next. “In time”, these will be followed (according to the bureau’s website), by utility providers such as electricity, insurance and other credit providers, as is the case with credit reporting in other countries.

So make sure you pay all your bills on time and do not let them run over the payment due date. This way, by the time utilities get added to the bureau, you will have a clean record and no late payments recorded.

What happens if I do not agree with my credit report?

Consumers and companies can dispute data in their report at any of the bureau’s customer service locations – you can only raise a dispute, however, if you have proof in the form of documentation such as a bank statement or utility bill.

The customer service representative will then raise a “dispute flag” in the system. The data management team will contact the credit provider, which has 20 working days to resolve the dispute and provide information to update the system.

Once that is complete, the customer service representative will get back in touch with the customer to let them know the outcome.

Once I have paid off my loan, how long will it take to clear so I can apply for another loan?

Based on an interview on Dubai Eye radio with the CEO of the credit bureau, Marwan Ahmad Lutfi, the changes will take effect every 30 days, and any changes from the banks will be reflected.

However if someone raises a concern, this can be modified. For example, if you pay off a loan in order to take up another one, you may need to ask your bank and the credit bureau to update your information so the next provider sees that you have nothing outstanding. Do not assume that just clearing your debt will take immediate effect on your credit report.

What can I do to make sure that I have a good credit record?

  1. Pay your bills on time – all of them, not just credit cards.
  2. Cancel credit cards you do not use – this will improve your score, as you will have less existing access to credit. Check carefully for any you may have forgotten!
  3. Cancel your overdraft if you do not need it. The same goes for products you do not need.
  4. Resolve any disputes quickly.
  5. If you can’t make a payment, warn the bank and ask if you can come to an agreement.

Remember, paying on time, with no defaults and few credit facilities, gives you a good credit score. Defaults, a large number of credit facilities and bounced checks will count against you.

[Related: How do I improve my credit score/ rating?]

What about credit reports and history for SMEs?

The bureau will turn its attention to SMEs during phase two when it launches the Commercial Bureau, which will include a database on commercial entities, including joint stock companies. Experts say that it could ultimately improve SMEs’ access to funding.

Younis Al Khoori, deputy chairman of Al Etihad Credit Bureau, has said that new SME owners will have to prove that they have a clean record of making utility, credit card and personal loan payments, as well as payments to telecom companies, to get loans for their companies after the bureau starts collecting data.

For anyone new to the UAE, what happens?

At the moment, credit reports are only based on UAE data, which means that any payment history elsewhere, either good or bad, will not be taken into account.

But in time the bureau plans to connect with international credit bureaux – including the world’s biggest credit agencies, Experian and Equifax, India’s CIBIL and Saudi Arabia’s SIMAH. The AECB says it will, in time, look to work with agencies in countries “that contribute a large share of the UAE’s foreign residents”.

So for new arrivals, it will be interesting to see whether the banks will continue to use their current method of “company approved” to assess an individual’s creditworthiness or whether, if everything depends on a credit score only going forward, banks will just refuse to give loans to new expats. Obviously this changes as individuals stay longer in the UAE and build a credit record and history for themselves.

[Related: Does your company affect your credit-worthiness? | Compare loans for non-listed companies