Al Etihad Credit Bureau introduces expense-to-salary ratio in credit reports

Al Etihad Credit Bureau’s credit reports will now include an expense-to-salary ratio (ESR) as it seeks to offer more insight into the creditworthiness of potential borrowers in the UAE by assessing their non-banking monthly payment obligations.

The ESR will be indicated as a percentage ranging from zero to 100 and represent a person’s financial obligations as share of their salary, the regulator said on Friday.

It will take into account active loan instalments, credit card limits and monthly telecoms and utility bills, the AECB said.

“Credit reports are a direct reflection of an individual’s appeal and payment behaviour to lenders like banks and financial institutions, but are also as important for other entities such as property managers and telecom service providers,” said AECB chief executive Marwan Lutfi.

“The addition of the ESR to the AECB reports is a natural step in our ongoing path towards generating data-driven insight for lenders to assess the creditworthiness of individuals, while taking into consideration their regular non-banking monthly payment obligations, such as utility bills and telecommunication bills.”

Set up in November 2014, the bureau brings transparency to the lending industry by assembling a credit record of the UAE’s financially active residents. It collects data such as loan, mortgage, credit card and phone bill payments.

An individual’s credit report documents their entire credit history in the UAE, showing the credit cards, loans or other finance products they have signed up for, along with their payment behaviour.

Therefore, bounced cheques and any payment defaults will be recorded. The document also lists a person's full name and Emirates ID number.

A UAE resident's report is generated only when they have a credit card, loan, mortgage or a phone bill. The AECB collects data from banks, finance companies and telecom companies.

A credit score for individuals is a three-digit number between 300 and 900 that represents a borrower’s creditworthiness and how likely they are to make credit card or loan payments on time. A low score indicates they are a higher risk for a lender while a higher score indicates a lower risk.

The new ratio will indicate a potential borrower’s total obligations as a share of their reported monthly salary, the credit bureau said.

Banks provide an individual’s salary details as part of regular data submissions to the AECB.

The feature will serve as an “additional parameter in assessing creditworthiness and affordability for individuals and banks alike”, the credit bureau said.

“ESR not only provides banks and credit report users with insights on the individual’s spending behaviour, but is also a barometer for individuals themselves that will allow them to gauge their own spending habits and — hopefully — consider a more financially responsible alternative should their ESR be less than ideal,” Mr Lutfi said.

Meanwhile, AECB’s ChequeScore service, which allows businesses and people to instantly assess the risk of a cheque bouncing, is now live on the credit bureau’s website.

ChequeScore, which covers cheques issued by UAE-licensed banks and calculates the issuer’s credit score, payment behaviour, issuance frequency and clearance history in real time, was unveiled as an app in February.

“It serves to lower the number of bounced cheques and provides a push for financial accountability,” the credit bureau said.

________________________

UAE salary guide 2022

• Remittance charges will be tackled by blockchain

• UAE's monumental and risky Mars Mission to inspire future generations, says minister

• Could the UAE drive India's economy?

• News has a bright future and the UAE is at the heart of it

• Architecture is over - here's cybertecture

• The National announces Future of News journalism competition

• Round up: Experts share their visions of the world to come

The bio

Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home

LA LIGA FIXTURES

Friday Celta Vigo v Villarreal (midnight kick-off UAE)

Saturday Sevilla v Real Sociedad (4pm), Atletico Madrid v Athletic Bilbao (7.15pm), Granada v Barcelona (9.30pm), Osasuna v Real Madrid (midnight)

Sunday Levante v Eibar (4pm), Cadiz v Alaves (7.15pm), Elche v Getafe (9.30pm), Real Valladolid v Valencia (midnight)

Monday Huesca v Real Betis (midnight)

While you're here

Con Coughlin: Nato must renew its sense of common purpose

Sholto Byrnes: In today's times, what is Nato really good for?

C Uday Bhaskar: Could the 'Quad' become Asia's new Nato?

Company%20profile

%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EXare%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EJanuary%2018%2C%202021%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EPadmini%20Gupta%2C%20Milind%20Singh%2C%20Mandeep%20Singh%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunds%20Raised%3A%20%3C%2Fstrong%3E%2410%20million%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%20%3C%2Fstrong%3E28%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Eundisclosed%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EMS%26amp%3BAD%20Ventures%2C%20Middle%20East%20Venture%20Partners%2C%20Astra%20Amco%2C%20the%20Dubai%20International%20Financial%20Centre%2C%20Fintech%20Fund%2C%20500%20Startups%2C%20Khwarizmi%20Ventures%2C%20and%20Phoenician%20Funds%3C%2Fp%3E%0A

Who's who in Yemen conflict

Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government

Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south

Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory

Key facilities

Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
Premier League-standard football pitch
400m Olympic running track
NBA-spec basketball court with auditorium
600-seat auditorium
Spaces for historical and cultural exploration
An elevated football field that doubles as a helipad
Specialist robotics and science laboratories
AR and VR-enabled learning centres
Disruption Lab and Research Centre for developing entrepreneurial skills

Bharatanatyam

A ancient classical dance from the southern Indian state of Tamil Nadu. Intricate footwork and expressions are used to denote spiritual stories and ideas.