Many UAE borrowers affected by wage reductions or redundancies amid Covid-19 received debt relief through the UAE Central Bank’s Dh256bn Targeted Economic Support Scheme.
However, as the payment holidays on loans and mortgages come to an end for some, those yet to secure a new role or who have failed to rein in their spending may struggle to manage their debt obligations.
Your credit score is technically a reflection of how likely you are to miss a payment in the future.
The first step towards resolving any debt issues is to secure a copy of your credit report from the Al Etihad Credit Bureau and find out your credit score.
Set up in November 2014, the bureau brings transparency to the lending industry by assembling a credit record of the nation’s financially active residents through harvesting credit data including loan, mortgage, credit card and phone bill payments.
Marwan Lutfi, chief executive of AECB, says it is important to know what your credit score is regardless of whether you are struggling to stay solvent during a pandemic or at a time when your finances are flying high.
"Your credit score is technically a reflection of how likely you are to miss a payment in the future," Mr Lutfi told The National in an exclusive interview for the Pocketful of Dirhams podcast.
Mr Lutfi says AECB now holds the credit data of 8 million individuals and almost 600,000 companies, with a total of 2.92 million active borrowers and around 8 million active credit facilities. Here's everything you need to know about your credit data in the UAE:
What is a credit report?
Your credit report documents your entire credit history in the Emirates, such as any credit cards, loans or other credit facilities you have signed up for, along with your payment behaviour. Therefore, if you have defaulted on a payment this will be recorded, along with any cheques that have bounced in your name. The document also lists your identity information, such as your full name and Emirates ID.
How does AECB collect the information?
You can only have a credit report if you have taken on credit in your name through a credit card, loan or mortgage or a phone bill. The organisation collects data from banks, finance companies and telecom companies. However, in the future, utility bills, tenancy contracts, government bills and even court data and your salary could be added.
"At this stage, salaries are not factored in because we're at the last point of really completing a mega project that we're working on under the direction of the central bank … when we feel the data is complete, then absolutely this is something that we will factor in,” says Mr Lutfi.
AECB is also working with the UAE’s three main jurisdictional courts in Abu Dhabi, Dubai and Ras al Khaimah as well as the federal courts, to ensure any rulings against individuals that include a payment obligation are recorded in the future.
What is a credit score?
While AECB initially issued just credit reports, it later expanded its remit to roll out credit scores for individuals – 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.
“If you have a score of 300, it means you've actually defaulted on a payment,” said Mr Lutfi. “This could mean you are 90 days past a due date for a payment, or you've had at least four bounced cheques in less than a year. There’s a correlation between the number of bounced cheques you have and the likelihood of you missing payments.”
How do you get the top score?
There is no winning formula, says Mr Lutfi, but three key components can boost your score: reducing the number of credit cards you hold, consistently reducing outstanding balances and making payments on or before the due date.
"Two of the biggest factors that decide your credit score are your payment record and credit utilisation," says Ambareen Musa, chief executive of UAE financial comparison website Souqalmal.com. "As a borrower you must avoid delaying or missing your loan instalments and credit card payments. Even if you cannot afford to pay off your full credit card bill in a certain month, make sure you pay off the minimum 5 per cent at least. To keep your credit utilisation low, refrain from using up more than 30 per cent of your available credit card limit."
Other measures, she says, include avoiding applying for too many different loans or credit cards in a short span of time.
Why is it important to track your score?
Financial institutions use your score to decide whether you are a good customer to lend to. Those with better scores may even receive more preferential rates on their credit facilities.
“It can also be the starting point for spotting and rectifying credit reporting errors and improving some of your own credit usage habits,” says Ms Musa.
Mr Lutfi says banks generally use credit scores for a quick pre-approval decision on a credit facility but will then download the full report to complete the process.
“A big misconception [among individuals] is 'AECB gave me a credit score of X and that's the reason why a bank rejected my application for a credit facility'. But that is not true,” he says.
Instead, while a bank will use a score or report to guide their lending decision, ultimately it depends on their own criteria at that given moment in time.
How is a credit score calculated?
The credit score is calculated using over 2,000 data points from various sources, such as banks, finance companies and telecom companies. The score also changes depending on your most recent financial behaviour. So while you may have been a model borrower for several years, miss a few payments and it will immediately dent your rating.
“It's really based on market data and we take into consideration things like the past due amount, the number of credit cards, the utilisation on credit limits, so for example, any negative status on these contracts, missed payments, how late these payments are,” says Mr Lutfi.
Who accesses your credit data?
Financial institutions access the data to decide if you are a good candidate to lend to.
“The use of credit report data in loan and credit card approval processes has really caught on in the last few years in the UAE. Apart from relying on salary and employment details, banks in the country are increasingly factoring in credit scores to assess a borrower's credit worthiness,” says Ms Musa.
“We're also hearing of borrowers being turned away by banks due to poor credit scores or a default-ridden repayment history. With the UAE credit scoring system maturing even further in the future, we could see banks introduce distinct prime and subprime financing options based on borrowers' credit scores.”
Some real estate companies also run credit checks on prospective tenants to eliminate the risk of bad cheques, defaults and rental disputes.
Last year FAB Properties, a real estate management company owned by the UAE's biggest lender First Abu Dhabi Bank, and property development and management company Dubai Real Estate Centre, said they now use AECB scores to assess new tenants.
How do I access my credit score and report?
Log on to AECB.gov.ae to download your credit report and score for Dh105. Residents that just want the score can buy it for Dh31.50. Simply register your details, provide your Emirates ID and passport number, complete the payment and you will receive the report by email within minutes.
Another option is to install the AECB app, available in Google Play and App Store, and download your report from there.
How often should I check my data?
Financial experts recommend checking your credit report at least once every quarter, says Ms Musa.
“Keeping a regular tab on your credit score can help identify outdated or incorrect credit details and also catch instances of identity theft. Credit reporting mistakes can severely impact your ability to qualify for financing, so it's best to have these rectified as soon as possible.”
For those who are very active – who regularly take on credit, make bulk payments and then close facilities, Mr Lutfi recommends checking quarterly, while for those with basic borrowing needs, such as one credit card, an annual check is enough.
Will my Covid-19 debt relief affect my credit score?
Mr Lutfi says the bureau has been monitoring this since the stimulus was announced. "The good thing is we have not seen any abnormal trends appearing from this activity and we are liaising with the UAE Banks Federation on this," he says.
Payment holidays are not considered as missed payments, he says. "It's actually the due dates that are changing, so there's been no issues on the report."
How do I correct a mistake?
The data stored by AECB is a reflection of what is in the banking system, “so if it is reported incorrectly, it's not a deliberate thing from a human being, it's actually systems", says Mr Lutfi.
To resolve an error, contact AECB's Contact Center on 800 287 328, which will raise it with the information provider. Alternatively, visit one of AECB's two customer experience centres in Dubai and Abu Dhabi.
Cinco in numbers
Dh3.7 million
The estimated cost of Victoria Swarovski’s gem-encrusted Michael Cinco wedding gown
46
The number, in kilograms, that Swarovski’s wedding gown weighed.
1,000
The hours it took to create Cinco’s vermillion petal gown, as seen in his atelier [note, is the one he’s playing with in the corner of a room]
50
How many looks Cinco has created in a new collection to celebrate Ballet Philippines’ 50th birthday
3,000
The hours needed to create the butterfly gown worn by Aishwarya Rai to the 2018 Cannes Film Festival.
1.1 million
The number of followers that Michael Cinco’s Instagram account has garnered.
Tonight's Chat on The National
Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.
Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster who has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others.
Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.
Facebook | Our website | Instagram
UAE currency: the story behind the money in your pockets
'The Lost Daughter'
Director: Maggie Gyllenhaal
Starring: Olivia Colman, Jessie Buckley, Dakota Johnson
Rating: 4/5
Previous men's records
- 2:01:39: Eliud Kipchoge (KEN) on 16/9/19 in Berlin
- 2:02:57: Dennis Kimetto (KEN) on 28/09/2014 in Berlin
- 2:03:23: Wilson Kipsang (KEN) on 29/09/2013 in Berlin
- 2:03:38: Patrick Makau (KEN) on 25/09/2011 in Berlin
- 2:03:59: Haile Gebreselassie (ETH) on 28/09/2008 in Berlin
- 2:04:26: Haile Gebreselassie (ETH) on 30/09/2007 in Berlin
- 2:04:55: Paul Tergat (KEN) on 28/09/2003 in Berlin
- 2:05:38: Khalid Khannouchi (USA) 14/04/2002 in London
- 2:05:42: Khalid Khannouchi (USA) 24/10/1999 in Chicago
- 2:06:05: Ronaldo da Costa (BRA) 20/09/1998 in Berlin
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
