UAE Credit Score: What Really Affects It? Experts Weigh In

Your credit score – a deceptively simple number ranging from 300 to 900 – wields extraordinary power over your financial future, yet millions from the world over remain mystified by how it’s calculated, what damages it, and why a seemingly small difference between 720 and 750 can save or cost them thousands of dirhams over a lifetime.

That being said, bounced cheques for rent deposits, forgotten utility bills and neglected service charges can devastate your UAE credit score in ways most residents never suspect, finance experts told Arabian Business.

“A credit score in the UAE is calculated by the Al Etihad Credit Bureau (AECB) using a proprietary algorithm using data collected from banks, finance companies, telecom providers, and other institutions. The score reflects how reliably you’ve met past financial obligations, including loan repayments, credit card usage and even utility or mobile phone bills,” Carol Glynn – Finance Coach & Mentor, Chartered Accountant (FCA) said.

“You cannot precisely calculate your credit score yourself since the methodology is not publicly disclosed,” she said, adding that the process involves “complex analysis of credit data.” However, according to Glynn, key factors influencing your credit score include:

• Payment history: Timely payments of loans, credit cards and bills have the greatest impact on your score, while delays or defaults lower it.
• Credit utilisation: The proportion of credit you are using compared to your total available credit. Lower utilisation (ideally below 30%) is favorable.
• Length of credit history: A longer history of responsible borrowing boosts your score.
• Credit mix: Having different types of credit (e.g., both loans and credit cards) can improve your score.
• Recent credit inquiries: Frequent applications for new credit or multiple credit inquiries in a short time can reduce your score.

What is a good or bad credit score in the UAE?

Stuart Porter, a chartered financial planner in the UAE with more than 20 years of experience also agreed that “the biggest factors are payment history, outstanding debt, and how much credit you use compared to your limits.”

“A score above 700 is considered good. Below 500 is viewed as high risk by lenders,” he added.

Echoing the sentiment, Glynn explained that “a score above 700 is generally considered good, while anything between 300 and 500 is viewed as poor. If your score is above 750, you’re most likely to be approved for credit and may even benefit from better interest rates.”

In addition, where Porter described AECB’s model as transparent, Glynn pointed to several “less-visible or unknown” risks.

“Neglected bank accounts or old credit cards with small unpaid balances can accumulate fees over time. If these balances go overdue, they can damage your credit score without you noticing,” she said.

She also warned of unpaid homeowners’ association fees and overdue insurance premiums tied to loans or mortgages, which can escalate into legal cases. In addition, Buy Now, Pay Later instalments from platforms such as Tabby and Tamara are increasingly reported to the bureau, meaning missed payments could affect scores.

Utility and telecom bills are also monitored. Unpaid post-paid mobile contracts, like electricity and water, can result in negative entries if overlooked.

Other factors include bounced cheques and legal judgments, failure to update KYC and contact informationand multiple small credit applications.

Late and missed payments among the biggest factor in UAE credit ratings

Among all these factors, both experts stressed that missed or late payments are the single most damaging factor.

“Not paying credit cards, loans, utility bills, or telecom bills on time is a leading cause of credit score damage. Just one missed payment over 30 days late can significantly lower your score and may stay on your credit report for years,” Glynn said.

“They have a major negative impact. Even one missed payment can lower your score significantly,” Porter added.

However, the impact extends beyond credit cards and loans.

“Missed or late payments play a huge role in damaging credit card scores. Even one missed payment can drop your score significantly, especially if it’s reported as more than 30 days late. Late payments show lenders you may be unreliable, which increases your perceived risk. Payment history is the single most significant factor in the Al Etihad Credit Bureau (AECB) credit scoring model, accounting for approximately 35 per cent of your overall score,” Glynn explained.

Common mistakes that torpedo credit scores

Both experts confirmed that applying for multiple credit cards or loans can damage your credit score.

“Applying for multiple credit cards or loans can hurt your score, especially if done within a short period. Each application leads to a credit enquiry, which can indicate to lenders that you are in financial distress and will lower your score temporarily,” Glynn said, adding that each application also triggers a “hard inquiry”, wherein the lender checks your credit report.

“Multiple hard inquiries within a short timeframe signal greater risk to lenders and can reduce your score. Opening several new credit lines at once can reduce the average age of your credit history and, if not managed wisely, increase your overall debt burden, and will reduce your score. Also, frequent applications can imply financial stress or over-reliance on credit. Lenders may view you as higher risk, which impacts both your current score and your chances of approval for future credit facilities,” she said, adding that recent credit applications can account for up to 10 per cent of your overall credit score according to the AECB’s scoring model.

“Hard inquiries remain on your report for up to two years, though their impact typically reduces after a few billing cycles,” she added.

Porter agreed explaining that frequent applications within a short time “lower your score as they indicate possible financial stress.”

So, how can one improve a damaged credit score?

“Improving your credit score in the UAE requires consistency and smart, intention financial habits. The first step is to obtain your credit report from the Al Etihad Credit Bureau (AECB). Review it for errors such as mistaken late payments or open accounts you don’t recognise. Dispute any inaccuracies promptly, as even minor mistakes can negatively affect your score,” Glynn advised.

“Next step would be to focus on making your payments on time. This is a crucial influential factor for your credit score. Pay all your credit cards, loans, utility, and telecom bills on or before the due date, ideally through automated payments or reminders,” she explained, advising individuals to try and use less than 30 per cent of available credit.

“For example, if your credit limit totals AED50,000 – keep outstanding balances below AED15,000. Paying down existing credit card balances is one of the fastest ways to see improvement,” she said.

Glynn recommended that individuals pay off high-interest debts such as credit cards first, using repayment strategies like the snowball method or avalanche method. Debt consolidation may assist with payment management.

One should limit new credit applications while improving their score, as each application results in a hard inquiry that temporarily reduces the score.

Old credit cards should remain open to maintain the average age of the credit profile, unless there are compelling reasons such as high fees or fraud. Having different types of credit can benefit the score if managed responsibly.

Individuals should ensure their address, Emirates ID, and other details remain current with banks and service providers to avoid missed bills or notifications, she said, adding that progress should be monitored by tracking the credit score every few months to maintain motivation, spot identity theft or errors, and assess the impact of efforts.

Credit score improvement requires time, with changes typically becoming noticeable within 6-12 months of consistent habits. The focus should be on timely payments, keeping debt levels low, limiting new credit requests, and monitoring credit health. For those recovering from serious debt or defaults, patience and consistency remain particularly important.

However, the duration of negative marks varies according to the experts.

“Late payments, whether on credit cards, loans, utility bills, or postpaid mobile contracts, are reported to AECB and remain on your credit report for up to five years. The longer and more frequent the late payments, the more severe the negative impact. Multiple late payments worsen the effect, and a pattern of payment delays can severely damage creditworthiness and make it take years to recover your score,” Glynn said.

“Most negative information, like late payments, remains on the report for up to five years,” Porter confirmed.

How to check your credit score and report

“You can check via the AECB mobile app or website by registering and paying a small fee,” Porter said.

The AECB updates credit scores monthly, though Glynn noted that “it depends on how often your financial institutions report your data. Some updates may reflect in real-time, while others take a few weeks.”

“You can dispute errors on your credit report with the AECB. If you find any inaccurate or outdated information on your credit report, you should raise a dispute request with the AECB as soon as possible,” she said, adding that the process generally works as follows:

• You need to submit a data correction or dispute request through the AECB’s designated channels (e.g., their website or app or via DubaiNow app). You will be asked to fill out a request form and attach a copy of your Emirates ID along with any supporting documents related to the error.
• The AECB does not directly modify your credit data but forwards your correction request to the relevant information provider (such as a bank, telecom, or utility company) that submitted the data.
• The concerned data provider then investigates your claim and updates their records if your correction is valid.
• The dispute resolution typically takes up to 10 to 20 working days.
• Once resolved, an AECB representative contacts you with feedback on the outcome.
• If the matter is not resolved through the regular correction tool, you can escalate the dispute by emailing AECB (e.g., to [email protected]) with all supporting documentation, including evidence like payment receipts or court rulings if applicable.

Moreover, the importance of credit scores extends beyond financial products, though experts differed on the current impact.

“It is becoming increasingly important. It’s not very frequent at the moment but landlords, employers (especially in financial roles), and even some visa sponsors are starting to consider credit scores as a measure of reliability,” Glynn noted.

“It may be considered for rental or job roles involving financial responsibility, but it is not always required,” Porter cautioned.

In addition, Glynn highlighted several points that residents should understand, especially when it comess to identity theft.

“It’s useful to note that the report is not just about credit, it is also a way to identify theft and mistaken identity. Check your credit report periodically for any accounts or inquiries you don’t recognise. Reporting suspected fraud early can help prevent further damage,” she said, adding that since an individual’s credit report and score are confidential, it can only be accessed “with your explicit consent, typically when you apply for a loan, credit card, tenancy, or certain jobs. Unauthorised access without your permission is not permitted under UAE law.”

“Another aspect to consider is the impact of joint accounts and guarantees. If you are a joint account holder or have acted as a guarantor (for a family member’s loan, for example), any late payments or defaults by the other party can affect your credit report and score. This is because even if you do not use the facility yourself, you remain financially liable.

“It’s important to also know that salary or income level does not influence your credit score; only your credit and repayment behaviours matter. Checking your own credit score does not affect your rating, but credit applications do,” she concluded.