How to Get Loan without Credit Score Check in UAE

If you are in the UAE and lack a credit score or have a poor credit history, obtaining a loan might appear a daunting task. However, you may find numerous avenues to secure a loan without the need for a credit score check.

This article aims to guide you through the process of availing a loan in the UAE without a credit check. From exploring alternative lending options to showcasing financial stability and collateral, we will delve into some practical strategies that can increase your chances of loan approval.

Whether you are a first-time borrower or seeking a fresh start, understanding these methods can prove useful in obtaining the financial assistance that you need. Let’s discover how to navigate the lending landscape and access funds despite the absence of a credit score check in the UAE.

An Overview of Credit Check

Credit Score in the UAE is a numerical representation of a person's creditworthiness based on their credit history. It helps creditors assess an applicant’s profile as well as the likelihood of loan repayment. These scores range from 300 to 900, with a higher score indicating greater financial credibility. Such high scores are usually achieved through on-time payments and minimal debt.

Lenders use credit scores to determine whether to approve one’s credit application as well as the interest rates and other applicable terms. A credit score below 640 is considered subprime, leading to higher interest rates on mortgages. Debtors with lower credit ratings may get shorter repayment terms or be asked to get a co-signer.

A score of 700 or higher, on the other hand, is seen as fair. It results in reduced interest rates and lower overall interest payments during the loan term.

Additionally, credit scores can impact your applications for smartphones, utilities, or apartment rentals. 

How is Credit Score Determined in the UAE?

Discussed below are the primary factors used by the AECB to calculate an individual's credit score -

• History of Bill Payment – 35%: Timely bill payments are crucial as they have the most significant impact on your credit score, accounting for 35% of the total score.
• Level of Debt – 30%: The level of debt is the amount that you owe in relation to your credit card limit. Frequent exhausting of your credit card limit can lower your score. This factor contributes to 30% of the credit score.
• Credit History Age – 15%: Credit history age refers to the duration of your credit account usage including credit cards and more. The age of all accounts, including the oldest one, is considered here. This factor makes for around 15% of the total score.
• Type of Credit Account – 10%: The types of credit accounts that you have and how well you manage them affect your credit score. Revolving accounts offer a credit limit without maturity dates, while instalment loans have fixed payments with maturity dates. Efficient management of both accounts boosts your score, comprising 10% of the total score.
• Total Credit Inquiries – 10%: The number of credit inquiries made also impacts the credit score, contributing 10% of the total score. While a few inquiries have minimal effect, multiple inquiries can negatively affect the score.

Besides the factors mentioned above, there are other considerations such as age, nationality, and others that may influence the credit score. Ultimately, the credit score is dynamic and can change over time based on these factors.

Why Do Banks Check Credit History?

Banks review your al etihad credit bureau (AECB) credit report before approving your loan or credit card application. The report contains comprehensive financial information about you (the applicant) in terms of your past and current loans, credit card details, credit score, and more.

This check is done to understand your creditworthiness, as the bank would be taking considerable risk in lending. Alongside your debt-to-burden ratio, which takes into account incoming and outgoing cash flow, this check is utilised to gauge your ability to repay the loan and meet instalments promptly.

Tips to Get a Loan Without a Credit Score Check in the UAE

Getting a loan from a bank with a low credit score can be challenging. While some banks offer loans without salary transfers and for non-listed companies, no UAE banks provide unsecured loans for those with low credit scores.

Here are some alternatives to consider for obtaining a loan in such cases -

• Peer-to-Peer Lending Platforms - Private lenders may offer loans to applicants with low credit scores. However, as they typically charge high interest rates, it can make them less desirable.
• Secured Loan - Banks may consider loan applications without credit checks for secured loans, where you provide assets like a car or gold as collateral. This may also apply to mortgage loans, which have collateral in the form of an existing property.
• Lending Using a Credit Card - You can also get loans against your credit cards in UAE, although the high-interest rates can make this option less favourable.
• Salary Advance - Salaried individuals can obtain loans against their monthly income from reputable banks in the UAE.

While exploring these options, you must focus on improving your credit score for future borrowing needs. Consistently paying credit card bills and instalments on time can lead to score improvement over time.

Remember to be diligent in maintaining a good credit score once achieved, as it can have a significant impact when you require financial assistance.

You Should Check Your Credit Report Regularly - Here’s Why!

Here are the reasons to check your credit report periodically -

• Understanding Your Financial Status Before Applying for a Loan - Before seeking any loan, be it a home loan or an auto loan, it is crucial to assess your current financial status. Reviewing your credit report will indicate the likelihood of loan approval. As each credit inquiry lowers your credit score, you can avoid unnecessary credit checks by going through your report first.
• Recognising the Spots for Improvement - By regularly monitoring your credit report, you can easily identify the areas for improvement. Checking your report 2-3 times a year can help you spot errors and rectify them.
• Detecting Errors in Personal Information - You can verify your credit report for any inaccuracies in personal details such as name, address, and mobile number. If errors are found, you can file a dispute with the relevant credit bureau.
• Checking for Identity Theft - You should stay vigilant for potential fraud that can negatively impact your credit score. If you notice unfamiliar accounts, address the issue promptly.
• Rectifying Incorrect Credit Account Information - Your credit report may contain erroneous records of credit accounts or duplicate loan or credit card entries. As incorrect details or mixing credit accounts can harm your credit score, you can detect them by checking your report and reporting them accordingly.
• Identifying the Reasons Behind Unexpected Credit Score Drops - If you notice a sudden decline in your credit score, you can review your credit report for potential fraudulent activity or inaccuracies and take the necessary steps to maintain your score.

Can You Improve Your Credit Score? If Yes, Then How?

If you have experienced the unfortunate situation of having a poor or bad credit score, do not worry! It is not a lifelong burden considering that credit scores are dynamic. You can improve your score by following the methods discussed below:

• Timely Bill Payments - Prioritise paying your bills on time, as late payments have a significant impact on your credit score as shown in the score calculation section.
• Clear Outstanding Debt - Work towards clearing any outstanding debt as your top priority to improve your score. However, avoid taking new debt to clear old ones if you are not in a stable financial condition.
• Manage Multiple Credit Accounts - Handling multiple credit accounts simultaneously and making timely payments can positively affect your credit score. With that said, consider getting new accounts only if you can manage them effectively.
• Repayment Without Delay - Make sure that there are no delays in repaying the loans that you've taken. Create a payment schedule that includes all credit accounts, bills, credit card payments, and loan instalments so that no payment is left unpaid by the end of its tenure.

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