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Friday, June 9, 2023

Newcomers to the UAE can get banking, loans faster by ‘importing’ their credit history

DUBAI: New residents in the UAE will be able to access banking services or take out loans to buy cars earlier than in the past through a major change to the credit scoring system.

This means that the credit history of an individual who has just settled in the UAE will be applicable for transactions with banks, other institutions, etc. This represents a major shift from the status quo, where newcomers find it difficult to take advantage of banking services or tap into other funding needs. This is especially true for those looking to start a business as soon as they establish a base here.

“If these people have a good credit history where they came from – the UK, India or the Philippines, why shouldn’t they include their credit rating,” said Marwan Ahmad Lutfi, chief executive of the Al Etihad Credit Bureau, which is The institutions that make change possible.

“Our new initiative allows us to literally ‘import’ existing credit information and make it available to banks that want to take these new residents on board.”

“At least banks in the UAE will be able to access past credit history and – hopefully – this will make it easier for them to decide what they want to do with these customers.

“If someone has settled in the UAE from the UK and has a good credit rating in the UK, why can’t the lenders here have access to that history? Instead of waiting for these people to establish some new records in the UAE.”

UAE’s expanding new resident base

No matter which way you look at it, the changes will be profound. The UAE’s resident base has been expanding significantly as jobs are being created or people look to establish a new home in the UAE to start a business or retire easily.

Categories such as auto sales may directly benefit from credit history imports. Leading dealerships have been complaining about banks’ reluctance to extend loans to potential car buyers in the first few months of their move. It all ended in lost sales. “We can’t lose even one client because banks are unwilling to lend,” said a senior official at a leading dealer. “It would be a game changer if the past credit performance of these residents could be immediately made available to local banks.”

This is exactly what the Al Etihad Credit Bureau wants to achieve. “When someone enters the UAE with a good credit history, we will allow that person to get that information through us – if he agrees,” Lutfi said. Like to say it’s probably our biggest move of the year.”

This is crucial for the UAE – everyone comes here. If you have a good credit history, why not bring it here?

-Marwan Ahmad Lutfi, Al Etihad Credit Bureau

Credit history “two-way flow”

According to Lutfi, the new arrangements for credit history will work both ways. If a UAE resident decides to move to a new country of residence, he/she can withdraw his credit rating.

“I had a colleague who was resettling and when he wanted to buy a car there, he found out that he had a lower credit rating than his son — because the son had been in that country longer,” Lutfi said. “As credit histories flow across borders, we cover all possibilities.”

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