DUBAI: UAE residents with poor credit scores due to bounced checks or delayed payments may soon have the opportunity to bring their ratings back to positive. The Al Etihad Credit Bureau is “evaluating” a scheme that would introduce a scheme in which individuals would actually be awarded – rather than just docked – points.
If the plan goes ahead, individuals with poor credit ratings are expected to start over on their records — making them more likely to get loans or make transactions that involve submitting checks.
“Let’s say a person gets fired and misses two or three payments, that shouldn’t keep a credit history for five years or more,” said AECB chief executive Marwan Ahmad Lutfi. “When you start paying back all your commitments on time, you need It takes 6 to 12 months to restore your credit rating.
“Credit ratings often work by penalizing people who don’t pay. We want to change that, and individuals can improve their credit score through good behavior. If you’re short on something, there’s something there. make up for.
“I don’t think a program like this exists anywhere in the world – but the UAE is unique and we want to do things differently.”
At the end of the day, if you’re short on things related to payments, there must be something you can make up for.This is what we try to do with the “rewards” program
-Marwan Ahmad Lutfi, Al Etihad Credit Bureau
Credit Ratings Matter
The Al Etihad Credit Bureau rates individuals on a scale of 300-900, and non-payment or delays translate into lost points – and in turn, the individual’s chances of getting a loan or other service, he has to write a check, etc.
The AECB’s credit ratings of individuals and businesses have become an integral part of the banking industry, with people seeking loans or other services being told “instantly” whether they are eligible.
There are approximately 2,000 “attributes” that make up an individual’s current credit score/rating. If the plan to “increase” the credit score goes through, “we could introduce other attributes into the score as an offset — you could earn points instead of just being penalized,” Lutfi said.
“We want to create a system where good credit behavior is actually rewarded.”
In pandemic year, UAE residents get a break
In 2020, when COVID-19 disrupted lives and businesses, Al Etihad Credit Bureau ensured that no missed payments or check defaults were reflected in credit scores.
The AECB could launch an incentive scheme as early as next year. “This will require a lot of analysis and (consumer behavior) modeling and testing with our partners such as banks,” the CEO added. “Next year, we plan to introduce major reforms and improvements to our credit scoring model.
“Our aim is not to punish everyone, but to actually do good. Let’s be clear, we don’t influence banks’ decisions on whether to lend to specific individuals or businesses.”
“10 Years of Data”
UAE Credit Bureau sits on a curated vast collection of data over 10 years. “We believe we can create models that are inherently more predictable,” Lutfi said. “It helps to make informed decisions – it helps individuals, businesses, banks and all other stakeholders.”