A credit report is a record of your payment history for each of your debts viz, credit cards, loans and other credit facilities along with your payment and bounced cheque history. The information is reported by your creditors. It shows how much debt you currently have, when you made payments over time, and whether or not you paid back your loans.

A credit score is a three-digit number that indicates how likely are you to make your credit cards and loan payments on time. Basically, this is used to assess the credit risk for any consumer.

The number lies between 300 and 900 and represents a borrower’s creditworthiness. The higher the number, the less risk you present to a lender. A rating above 700 is considered a good credit score in the UAE.

In the UAE, the Al Etihad Credit Bureau (AECB) is responsible for issuing credit scores. The organization was set up in 2014 to bring transparency to financial transactions in the country. The AECB puts together a credit report of financially active residents in the country by compiling data from loan, mortgage, credit card transactions and phone bills. Consequently, any UAE resident with any of these to their name will have a credit report and a credit score.

A consolidation loan is essentially a large personal loan used to pay off smaller loans. This loan is typically given at a high interest rate which often makes it an expensive option to take. Credit providers will generally check to see if you have the following: High credit score, no arrears on your accounts and sufficient debt affordability*.

*Affordability is how much money you have left after paying for all household expenses & debts.

Consolidation loans can help you to reduce monthly debt repayments if you have short-term debt with high interest rates. If you have a home loan, vehicle finance or long-term debt, this solution may not be the best for you. If you are over-indebted, you are unlikely to qualify for a consolidation loan.

You are considered “blacklisted” if you are unable to get more loans or new debt from credit providers. This is probably due to a low credit score caused by missed payments, legal action and other adverse information. To improve your credit record, you need to catch up on all arrears and continue full payments for an extended period of time. If your loan applications are being denied repeatedly, you might be over-indebted and in need of debt counselling.

Debt counselling is ideally suited for over-indebted consumers who are struggling with their debt repayments. At global debt advisory you can go through a quick but thorough assessment with a debt expert who will be able to assess and recommend the right solution for you. You will be informed about all available solutions and you will be recommended a solution with reason.