Your credit score is a reflection of your credit history. If you have a great credit score, you will have no problem getting a loan or another credit card from banks. However, if you have a bad credit score it might spell trouble out loud for you. Therefore, here are five tips that will help you build a strong credit score in the UAE.

credit score

credit score

  • Make your payments on time: When your credit card bill is due every month, make sure that you pay back all your dues on time so that interest does not get added to your credit account. Your credit score can take a huge hit if you do not make payments on time month after month. It is very important for you to clear your dues, pay your utility bills and make all your payments to the bank and credit card company during the grace period of every month. If your payment gets carried forward to your next month, interest is charged on the outstanding amount. This interest is usually very high in case of credit cards in the UAE. Thus, to save yourself from paying more than what you actually spent, make your payments on time and never miss a deadline
  • Check your credit report meticulously: Your credit report contains all the relevant information about your credit card. Make sure that you check this credit report regularly to catch any project charges for penalty setting added to your card without your notice. Your credit report is an incredibly important document. It contains the histories of all your loans, all active credit cards and all other lines of credit that you have for yourself. The credit report may or may not contain a credit score as well. Your credit report is scrutinized by your employer, your mortgage lender and your bank operators before giving you a new loan. They will check this credit report before approving you for any new lines of credit. Thus, it is very important to keep your credit report in good shape and make sure that any reductions in your credit reports integrity is not taking place without your knowledge
  • Do not spend over your credit limit: Banks and credit card companies give you a credit limit for your spending for a reason. If you continually spend above the credit limit, it does not fare well with your credit history. If you are not satisfied with the credit limit offered by the bank, pick up the phone and ask them to increase your credit limit. In any case, reaching the credit limit every billing cycle is not a smart move. Make sure that you spend only 35 and 40% of your credit limit every month, to continually grow your credit score. This range is optimal for regular credit card users to keep building their credit score while still using the card.
  • Do not close old credit cards –  If you have multiple credit cards, but you are not using them, it is not a good idea to close them. In your credit report, there is a column that features your credit history. This is the amount of time for which you have been using lines of credit from different sources all around the country. If you close your credit card, it will effectively make you a less eligible borrower. The more the age of credit history, the more you are likely to procure a loan
  • Making large purchases –  Your credit limit and your credit score are two factors which come into play when you make a large purchase. If you make a purchase and you cannot afford it on your credit limit, your credit utilisation ratio goes up. This credit utilisation ratio should stay as low as possible, to make you a more eligible borrower