Is 670 a Good Credit Score?

Is 670 a good credit score in UAE? This seemingly simple question often plagues the minds of many individuals striving to understand the intricacies of credit scores and their impact on personal finances.

A credit score, a numerical representation of an individual's creditworthiness, is an essential metric lenders and financial institutions use to determine the likelihood of a borrower repaying their debts. Ranging from 300 to 900, credit scores are calculated using factors such as payment history, credit utilisation, length of credit history, types of credit, and recent credit inquiries.

As a result, understanding where a 670 credit score stands in the grand scheme of things can be crucial to better grasping one's financial position and unlocking the potential for securing favourable loan terms, credit card offers, and more.

In this comprehensive guide, we will delve into the significance of a 670 credit score, exploring its implications for different financial scenarios and offering practical advice on improving and maintaining a healthy credit standing. Armed with this knowledge, you can confidently navigate the complex world of credit and make informed decisions to support your financial well-being.

What is a Credit Score?

A credit score is a numerical representation of an individual's creditworthiness, which reflects their likelihood of paying back borrowed money on time. In the UAE, the credit score is an important indicator used by banks and financial institutions to evaluate the creditworthiness of individuals applying for loans, credit cards, or other financial products. These scores fall within a range of 300 to 900 and are calculated considering credit-related transactions and other bills.

A high credit score indicates a low default risk, making it easier for individuals to obtain credit on favourable terms. On the other hand, a low credit score indicates a high risk of default, which may lead to higher interest rates or outright rejection of credit applications. Thus, maintaining a good credit score is vital for individuals who want to access credit in the UAE.

Who Calculates Credit Scores in the UAE?

Credit scores in the UAE are calculated by the al etihad credit bureau (AECB), which collects and analyses data from various sources such as financial institutions, utility companies, and telecommunication providers.

The data collected includes details regarding credit cards, loans, and other financial transactions as well as payment histories for bills like electricity, water, and phone bills. Using this data, the credit bureau generates a credit report and assigns a credit score to the individual.

AECB credit score is widely used by financial institutions in the UAE to evaluate an individual's creditworthiness when they apply for credit. A higher credit score indicates that the individual is less risky to lend money to, while a lower credit score indicates higher risk. AECB credit score is also used by telecom providers and utility companies to assess an individual's creditworthiness before offering their services.

To generate your AECB credit score and report from Al Etihad Credit Bureau's official website, you would be required to pay a fee of AED 84 (including VAT). For companies, this fee is AED 157.5 (inclusive of VAT).

Note: You can check your credit score range for free on Policybazaar.ae. 

What Does a 670 Credit Score Mean?

Given below is the categorisation of different credit scores in the UAE-

Credit Score (Range)	Category	Star Equivalent
300-540	Very low	1
541-650	Low	2
651-710	Medium	3
711-745	High	4
746-900	Very High	5

As evident from the given categorisation, a 670 credit score is considered a "fair" credit score and falls within the 651-710 range. It is not the best credit score, but not the worst either. This score indicates that an individual may have had some credit issues or missed payments in the past, but there is still room for improvement. However, having a fair credit score does not mean an individual cannot access credit products.

Credit Cards for 670 Credit Score

Individuals with a 670 credit score have the option to apply for both secured and unsecured credit cards. Generally, secured credit cards are more accessible with a score of 670 as they require collateral to secure the credit limit.

This collateral is usually in the form of a cash deposit equal to the credit limit of the card. It serves as security for the bank in case you are unable to make timely payments, in which case the bank can use it to cover your due credit card bill. As a result, secured credit cards can be a good option for individuals with a fair credit score, as they offer an opportunity to build a credit history while minimising the risk of default.

On the other hand, unsecured credit cards do not require collateral, but they are typically more challenging to obtain with a 670 credit score. It is still possible to get approved for unsecured cards with a score of 670, but you will likely receive high-interest rates and other fees. It is essential to review the terms and conditions carefully before applying for any unsecured credit card, as high-interest rates and fees can significantly impact your finances in the long term.

Personal Loan for 670 Credit Score

When it comes to obtaining a personal loan with a 670 credit score, it is a relatively straightforward process compared to other credit products. Lenders tend to accept loan applications from individuals with fair credit scores, including those with a credit score of 670.

When applying for a personal loan with a 670 credit score, it is crucial to understand that lenders consider several factors before approving the loan application. Besides the credit score, lenders may also look at other factors such as employment status, monthly income, and the amount of the loan applied for. 

While a credit score of 670 may meet the minimum eligibility criteria for a personal loan, it may still be subject to higher interest rates due to the increased risk associated with lending to individuals with lower credit scores.

Apart from the credit score, the loan amount applied for may also influence the approval of the personal loan application. Applying for a small loan amount may increase the chances of approval, as it would reduce the risk for the lender. Moreover, having a stable job and a steady income stream can improve the chances of getting approved for a personal loan, even with a fair credit score.

Home Loan for 670 Credit Score

To procure a home loan in UAE, having a good credit score is essential. A mortgage loan is a significant financial commitment that often requires a high loan amount, making it challenging to secure a loan with a low credit score. However, with a 670 credit score, you can obtain a home loan, but it may be with less favourable terms. 

Financial institutions consider several factors when assessing an individual's eligibility for a mortgage loan, including credit score, employment status, monthly income, and debt-to-income ratio. Employment status and monthly income are some other factors considered here. A stable job with a steady income stream can increase your chances of getting approved for a mortgage loan. Lenders typically require borrowers to demonstrate a stable income stream that is sufficient to repay the loan amount.

Auto Loan for 670 Credit Score

When applying for an auto loan with a 670 credit score, it's essential to understand that lenders may offer higher interest rates to mitigate the risk associated with lending to individuals with fair credit scores. As a result, individuals may end up paying more interest over the life of the loan.

Apart from credit scores, auto loan providers consider other factors when processing loan applications. Employment history and income play a significant role in the approval process. Lenders typically require borrowers to demonstrate a stable employment history with a steady income stream that is sufficient to repay the loan amount. 

Additionally, a low debt-to-income ratio can improve your chances of getting approved for an auto loan, as it indicates that you have enough income to repay the loan amount without defaulting.

The loan term is another factor that auto loan providers consider when processing loan applications. Longer loan terms may result in higher interest rates and may lead to a higher overall cost of borrowing. It is essential to consider the loan term carefully and calculate the total cost of borrowing to determine whether it's a viable option.

Insurance Plans with 670 Credit Score

When it comes to insurance premiums, credit scores can play a role in determining the cost of your coverage. Insurance providers consider various factors when evaluating risk and setting premiums, including credit scores. 

A 670 credit score is considered a ‘fair’ credit score and may result in reasonable insurance premiums. However, it's essential to keep in mind that other factors may also influence insurance premiums. Individuals with a fair credit score may still be subject to higher insurance premiums due to other risk factors.

By improving credit scores, individuals may be able to access better insurance premiums and save money on insurance costs. It's also important to shop around and compare different insurance providers' rates and terms to find the best coverage at the most reasonable price. With these steps, one can improve their chances of getting reasonable insurance premiums and better protect themselves financially.

How to Boost Your 670 Credit Score?

Maintaining a good or excellent credit score is crucial for obtaining loans and credit cards without any trouble. For individuals with a 670 credit score, there are several efficient ways listed below to improve their credit score and achieve better financial stability in the future-

• Maintain a Positive Bill Payment History - One of the most crucial factors that determine credit scores in the UAE is bill payment history, accounting for up to 35% of the overall score. With the payment history of the past 5 years considered here, a positive payment history demonstrates reliability and trustworthiness with credit. For this reason, it's essential to make bill payments on time to avoid late payments or defaults that can negatively impact credit scores.
• Optimise Your Credit Usage - Credit usage is another significant factor in the calculation of credit score in UAE, accounting for 30% of the credit score. Using credit responsibly, making timely payments, and maintaining a low credit utilisation ratio can improve credit scores. However, missing payments, reaching credit limits, and having numerous outstanding accounts can lead to a lower credit score.
• Spend Wisely - It's important to spend wisely when using your credit card, regardless of the maximum limit available. Avoid maxing out your credit card every time, as it's essential to maintain a healthy borrowing percentage. Generally, using 15% to 30% of your credit card limit in every billing cycle is recommended to keep your credit score in good standing. Spending in extremes (too much or too little) can negatively affect your credit score, so it's important to strike a balance and use credit responsibly.
• Settle Existing Debts - Paying off loans on time indicates creditworthiness and can significantly boost credit scores. Moreover, reducing debt can free up more funds to achieve other financial goals and improve the debt-to-income ratio, which is another crucial element of credit scores.
• Keep Track of Credit Repayment Dates - To maintain a good credit score, it's crucial to keep track of credit repayment dates, just like utility and phone bills. Missing or making late payments can have a negative impact on your credit score. To avoid this, you can keep track of all repayment dates and set up auto-pay services if necessary. You can also sync your credit card and current accounts and set up an auto-pay system to ensure payments are made on time. If you have multiple credit tools with the same bank, you can even request to have the due dates changed to a single day for easier tracking. Simply have a conversation with your bank to explore this option.
• Avoid Excessive Monitoring of Credit Scores - Monitoring credit scores regularly can also help you maintain good credit scores, as you would be aware of where you are going wrong as per your recent actions. However, checking credit scores in excess can potentially have adverse effects. It's advisable to review credit scores every three months or so to keep track of them.
• Avoid Applying for Multiple Cards - To maintain a healthy credit score, it's important to avoid applying for too many credit cards simultaneously. Each time you apply for a credit product, such as a credit card or a loan, the bank pulls out your credit score. Multiple such inquiries can significantly weaken your credit score, which can lead to your 670 credit score dropping even further. Furthermore, managing multiple credit cards can make it challenging to keep track of repayment dates and maintain a healthy credit utilisation ratio. It's best to be selective and apply for credit only when necessary to avoid any negative impact on your credit score.

How to Check Your Credit Score for Free?

If you're looking to check your credit score in the UAE, Policybazaar UAE offers a free credit score service that can help you avoid the fees charged by the AECB and get an idea of your credit score range.

Here are the steps to follow -

• On policybazaar.ae, navigate to the 'Banking Products' drop-down menu.
• Select the 'Check free credit score' option.
• Enter the necessary details and follow the on-screen instructions.
• Once your credit score is generated, it will be sent to your registered email ID.

It's important to check your credit score at certain intervals to ensure that it's accurate and to identify any errors or fraudulent activities that may negatively impact your credit score. With the free credit score range service of policybazaar.ae, you can easily access this information and take steps to improve your credit standing.

Bottom Line

We can now confidently answer the question posed at this article’s beginning: Is 670 a good credit score? Based on the credit score categorisation in the UAE, a 670 credit score falls within the 651-710 category and is considered to be in the medium or fair range.

While it may not be the best credit score, it still offers you opportunities for accessing credit products such as loans, credit cards, and insurance plans. However, with a 670 credit score, you may have to pay higher interest rates and fees than those with higher credit scores.

Since there is a scope for improvement, you can always try to work on your credit score and make it the best. To improve your credit score, you should focus on maintaining a positive payment history, using credit responsibly, settling existing debts, keeping track of repayment dates, avoiding applying for multiple credit cards, and monitoring your credit score regularly.

It is also crucial to check credit scores frequently. This can be easily done on Policybazaar.ae, which offers a free credit score range service that can help you be aware of where you stand (in terms of credit score) for free!

By following these practical tips and taking advantage of free credit score services, you can improve your credit standing, gain access to better credit products, and achieve your financial goals.

Policybazaar UAE – Helping you navigate the wilderness of the insurance world!

Credit Score for different types of Loan
Credit Score for Personal Loan	Credit Score for House Loan	Credit Score for Car Loan	Credit Score for Student Loan

 

Guide for Credit Score in UAE
Mistakes That Can Negatively Impact your AECB score	What is a Bad Credit Score in the UAE?
AECB Increases its Scoring Capacity	Minimum Credit Score required to get a Credit card in UAE
What Affects Your Credit Score in UAE ?	Credit Score You Need to Buy a House in 2025
How to Improve Credit Score in UAE	500 Credit Score: Good or Bad?
Minimum Credit Score required to get a car loan in UAE