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3 things you didn't know about Credit Scores

3 things you didn't know about Credit Scores

You are looking to apply for a loan or credit card. Your next step would probably be going to a bank branch, exploring your options with the sales person, and finally discussing the what, the how and the when.

But, to approve your loan your bank will have to first check on your Credit Score. Now what is that one might wonder? Simple. Think of it as three digits that help banks determine whether or not they should lend money to you and how much. Credit Scores are an integral part of everyone’s’ financial life. But, do you really know these three things about Credit Scores?

 

Reliability

When you apply for a loan or credit card, banks determine how likely you are to make your payments on time through a so-called ‘Credit Score’. It ranges from 300 – 900; the higher it is, the better for you because it means you can be trusted with the money. In the UAE, any individual can get their Credit Score report from Al Etihad Credit Bureau (AECB) – you can visit their website www.aecb.gov.ae or download their app from your Apple or Google Play store. You can even check it instantly in your Liv Bank app.


 

Multi-sourced

If you think only banks contribute to Credit Scores, then you’ve got it wrong. Non-banking finance companies and telecom companies are examples of other sources that use and influence your Credit Score. The score is not just used by banks to decide on your loan. In future, Credit Scores will be more prominent as landlords and retailers start offering more benefits to those with higher Credit Scores.

 

Improvement

Use your credit cards responsibly, make your credit card and utility bill payments on time, reduce the number of credit cards in your wallet and keep reducing your outstanding balances to be able to improve your Credit Score over time. Usually, you need to be consistently well-behaved for at least 6 months to see a noticeable change in your Credit Score. And then, keep up that good habit!

It’s good to start early and build a strong credit score as you grow.  Up next, we’ll be sharing with you some tips and tricks on how you can actually use your credit card more responsibly – and get the most out of its benefits. #Liv4Knowledge