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How Your Credit Score Affects Your Home Loan Approval in the UAE

March 18, 2025
How Your Credit Score Affects Your Home Loan Approval in the UAE

If you’re planning to buy a home in the UAE, your credit score is one of the most important factors that can determine whether you get a mortgage, how much you can borrow, and what interest rate you’ll pay. Many buyers focus on the down payment and property price, but your credit score plays a big role in securing a good mortgage deal.

Banks use your credit score to evaluate how reliable you are as a borrower. A higher score signals that you have a strong financial history, making you a low-risk customer. On the other hand, a lower score may raise concerns about your ability to repay the loan, leading to higher interest rates or even loan rejection.

What is a Credit Score?

A credit score is a three-digit number (ranging from 300 to 900) that reflects your financial behavior. The Al Etihad Credit Bureau (AECB) in the UAE assigns this score based on several factors, including:

  • Payment History: Do you pay your credit card bills, loans, and utility bills on time?
  • Debt-to-Income Ratio: How much of your monthly income goes toward debt repayments?
  • Credit Utilization: How much of your available credit are you using? Keeping it below 30% is recommended.
  • Loan and Credit Card Applications: Too many applications within a short period can lower your score.
  • Default or Missed Payments: Late payments or unpaid debts have a negative impact.

The higher your credit score, the better your chances of getting a home loan approval with a lower interest rate and better repayment terms.

Minimum Credit Score Requirement for a Home Loan in the UAE

While each bank has its own lending criteria, most banks in the UAE prefer a credit score of 650 or higher for mortgage approvals. However:

  • A score of 700+ increases your chances of approval and getting the best interest rates.
  • A score between 650-700 may still qualify for a loan but with slightly higher interest rates.
  • A score below 650 could result in higher down payment requirements or loan rejection.

If your credit score is low, you may need to offer a larger down payment or work on improving your financial profile before applying.

How a High Credit Score Benefits Your Mortgage Application

  1. Lower Interest Rates: Banks reward good credit scores with better interest rates, saving you money over time.
  2. Higher Loan Amounts: A strong score may qualify you for a larger loan, giving you more options when choosing a property.
  3. Easier Approval Process: Banks are more likely to approve your loan without excessive paperwork or additional guarantees.
  4. Flexible Repayment Terms: You may get longer repayment periods or special discounts from lenders.

On the flip side, a low credit score can lead to higher mortgage rates, stricter loan conditions, or even loan rejection.

How to Improve Your Credit Score Before Applying for a Mortgage

If your credit score isn’t high enough, don’t worry—there are steps you can take to improve it before applying for a home loan:

  • Pay Bills on Time – Make sure all your credit card, loan, and utility payments are made before the due date.
  • Reduce Outstanding Debt – Pay off any overdue credit cards or loans.
  • Avoid Maxing Out Credit Cards – Keep your credit utilization below 30%.
  • Don’t Apply for Too Many Loans at Once – Multiple applications in a short period can hurt your score.
  • Check Your Credit Report Regularly – Review your AECB credit report and fix any errors.

By improving your credit score, you can qualify for better mortgage terms and save thousands of dirhams over the life of your home loan.

Final Thoughts

Your credit score is one of the most important factors when applying for a home loan in the UAE. It determines not just whether you get approved but also how much you’ll pay in interest over time. Taking steps to improve your creditworthiness before applying for a mortgage can make homeownership more affordable and stress-free.
If you’re planning to buy a property soon, start checking your credit score, reducing debt, and ensuring your financial history is in good shape. A little effort now can save you a lot of money in the future!

FAQs

Have questions? We’ve got answers. Below, we address the most common questions related to this blog post to help you gain deeper insights.

What is a good credit score?

A good credit score typically falls between 700-850, depending on the scoring system used. Higher scores indicate lower risk for lenders, improving loan approval chances and interest rates.

What is a good UAE credit score?

In the UAE, a good credit score from Al Etihad Credit Bureau (AECB) is usually 700 or above. A score above 750 is considered excellent, while below 650 may make loan approvals difficult.

How to calculate credit score in UAE?

The AECB calculates your credit score based on payment history (on loans, credit cards, and utility bills), Credit utilization (how much of your credit limit you use), Number of credit accounts and applications and Loan defaults or missed payments

How can I check my credit score for free?

In the UAE, you cannot check your credit score for free. You can purchase your credit report from the Al Etihad Credit Bureau (AECB) website or mobile app. Some banks may offer free score checks for their customers.

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