Navigating the financial landscape in the UAE can be a confusing and stressful task, especially when it comes to understanding and improving your credit card score.

This score plays a crucial role in securing loans or opening new accounts for leasing purposes, whether for a car or property.

In this article we will deep-dive into how you can maintain a healthy credit card score, with tips and techniques that are particularly applicable for expats in the UAE!

What Is A Credit Card Score

A credit card score is a method of judging how risky someone is in terms of repayment of loans.

Simply put, a credit card score is a three-digit number from 300 to 850, which depicts how worthy someone is of being offered a loan and how much of a risk they pose in terms of the debt payment. 

The credit card score method has proven itself quite useful and is used by most moneylenders and banks worldwide.

This method was introduced by Fair Isaac Crop and is very popular. 

Why Is A Credit Card Score Important 

Credit card scores are critical as they display your ability to repay loans.

They also show your trustworthiness to a potential moneylender.

Credit card scores depend on many factors, such as Bill payments, number of accounts, debt you owe, and types of credit, among other things.

Having a higher credit card score means that your loan applications will get processed faster without unnecessary delays.

You might also get better rates if your score is above average since a higher score means the more trustworthy you are. 

How Can You Check Your Credit Card Score

You can ask your bank to generate your credit report, which contains all the essential information, including your credit card score.

Your credit report will show your payment history, unpaid bills, and bounced cheques.

This will allow you to make educated decisions on your next purchase by helping you better manage your finances. 

Ways To Improve Credit Card Score 

Come Up With A Payment Plan

One of the best methods to improve your credit card score is to utilize your credit card efficiently.

Your credit card will have a credit limit to it.

You should use a set percentage of it which should be significantly less than the limit for this plan to work. 

Ideally, you should use only 30% of the total limit of the credit card, which is called the amount of credit utilization.

This makes sure that your balance stays very low.

People with the best scores use only 10% or less of their credit limits and maintain a minimum balance. The credit card issuers generate a report at the end of the billing cycle, and that is where this trick comes into play.

You should ensure that when the time of billing comes near, the balance in your bank should be minimal as it will be a contributing factor when calculating your credit score.

You can either pay the bills at once before the billing cycle ends or make small payments throughout the cycle to keep the balance low.

This is a very efficient method and with fast results as well, since the issuers use the low balance to generate a score for you, it will be a good one! 

Credit Limits 

The credit limit can be increased if you talk to your card issuer, and your current score is good as well.

Increasing your credit limit does not directly benefit your score, but it affects it indirectly.

When your credit limit is increased and your balance stays the same, it automatically lowers your credit utilization percentage, ensuring that your lower balance will help with a good score at the end of the billing cycle. 

However, all of this depends on the fact that your balance should also stay low. It will not be beneficial if your balance also rises as your limit rises. It will cancel out the effect.

Card utilization is a very significant contributing factor in determining your scores hence this trick almost always works. Moreover, the effects are instant as well. As soon as your card issuers increase the limit, your card utilization will lower. 

Help As An Authorized User

You can also get help from someone with a good account history and a higher credit limit.

To do this, you need to list yourself as an authorized user of someone else’s account, and their higher credit limit will also help you lower your credit utilization.

This account will be added to your credit reports, and its healthy payment history will also reflect on your finances. 

Moreover, the person whose account you will be adding to your credit report does not have to allow access to you into his account, so you cannot make transactions or even access the account number if the other person doesn’t want you to.

Pay Off Bills Timely 

This is the most crucial method which will help you to increase your credit score.

You should make a timetable and pay off all your bills promptly, and whatever happens, do not be late on your payments as they will cause your credit score to drop with a considerable effect and will reflect on your credit reports for several years to come. 

This means that once you miss a payment and it’s reported to the authorities, you will have a considerably hard time getting your credit card score to rise again.

It will rise, but the amount of effort you will have to put in will increase a lot

Highlight Credit Report Errors

How To Improve Your Credit Card Score In UAE 1

The issuer can generate your credit card report, and you should spend a considerable amount of time reviewing it because, a lot of times, your reports can have wrong information listed on them, which is pulling down your score. 

You should ensure that all the payments paid on time are marked to be on time and not late.

Make sure to see any activity you do not recognize and if the issuers have not mixed someone else’s credit card activity with yours.

Furthermore, you can also list down and single out things that are too old to be listed on the report, as they will still harm your score.

You can dispute anything and everything on these reports, so make sure that you check them.

You can do all of these things on the list, but it will not help you if your credit card issuers are making a mistake in the report because the report will be seen as well while making your credit card score. 

Secured Credit Card 

This method is relatively slow but works well for a newbie.

You should deposit a sum of money in the account when you take your credit card from the bank. This sum of money should be equal to the credit card limit.

This portrays you in a good light, less of a risk, and allows you to return the payments and build good credit as well.

This method is very effective. However, it requires cash to be deposited and locked in the bank. This move will help you to ease out past credit mistakes as well. 

Know Your Starting Point 

This point urges you to have a plan before you can start taking off all your debt. Make sure you know your starting point and your current credit score.

You can get this information on the credit report, which will help you understand how bad or good things are with you and your money lenders. 

You should read your credit report thoroughly to understand where you are bleeding financially, and if you have debt in one or more of your credits, then which one is it?

This will help you understand the debt’s root issue and allow you to see everything for what it is.

You should understand how much you spend from which credit card and your exposure.

This will genuinely help you to know your starting point, after which you can handle your credit card score and increase it. 

Avoid More Debt

How To Improve Your Credit Card Score In UAE 2

The easiest way to increase your credit score is to make sure that you do not take on more debt.

It can be very tempting to rack in more debt, given how easy it is to open more lines of credit and get access to funds. 

You should learn to plan your spending habits, and if you do have to open lines of credit due to financial circumstances, then it is best to reevaluate your spending habits and curtail your expenses.

The best way to increase your credit score is to have less debt to pay off in the first place. All of these methods will help you if you have a lot of debt but not having this problem in the first place is what we will recommend to you.

Conclusion

Maintaining a high credit card score is a vital part of managing your finances in the UAE, especially for expats.

A score above 800 is ideal for obtaining loans from local Emirati banks efficiently and with minimal vetting.

Hopefully this article has provided various strategies to help you achieve and maintain this score.

Remember, financial prudence goes a long way in ensuring a smooth and comfortable life in the UAE!