How To Improve Your Credit Score Before Applying for a Mortgage in UAE

There’s no denying, your credit score affects your likelihood of being approved for a home loan. 

 

From home loans to overdrafts and credit cards, having a high credit score enables you to borrow more money and get a better interest rate when applying for a mortgage in the UAE. Whereas, having a low credit score, possibly means you’re likely to be rejected for a mortgage altogether. 

Okay, let’s talk turkey. 

Credit score is not the only thing that matters in getting a mortgage approved, but it’s important to be aware of your score and the ways to improve it. 

What is a Credit Score? 

Credit report is the document containing credit score, accompanied with all your financial information. This includes details of any debits, lines of credit and even your bounced cheque history. Surprisingly, this also envelops monthly payment history for things like utility bills and even your phone contracts of the past 5 years. 

What are the Benefits of a High Credit Score? 

Here are handful of significant benefits of having high credit score: 

 

• Your chances of mortgage approval is manifolded including personal loans, home loans, overdrafts and credit cards.
• You can be offered a lower interest rate on your mortgage. 
• Lastly, you might be able to borrow more.

What is Mortgage Eligibility? 

A healthy credit score portrays a history of responsible financial management and manifolds the chances of mortgage approval. 

 

Different types of mortgages have varying minimum credit scores requirements. Primarily, specific requirements can differ among lenders, but having a credit score of 620 at bare minimum is generally advisable to be eligible for most conventional mortgages. Some government-supported mortgages, like FHA loans, have more flexible requirements, enabling borrowers with lower credit scores to easily qualify.   

 

In nutshell, credit scores directly impact the interest rates and loan terms of borrowers. Borrowers with good credit scores are often eligible for lower interest rates, resulting in significant savings over the life of the mortgage. Moreover, a healthy credit score also paves way to more favourable loan terms, like minimum down payment requirement or a higher loan amount. 

 

5 Proven Ways to Improve Your Credit Score Before Applying for a Mortgage 

Way 1: Use a Credit Card Wisely

Using a credit card wisely helps in improving the credit worthiness. But be mindful – if you’re late for your payments or somehow go over your limit, it could have a negative impact. 

Here are some handpicked things to consider:  

• Always maintain a good credit utilisation ratio – this is the maximum amount limit you can use through your card.

• If you are unable to repay your expenses, your credit score could get worse.

• Try to pay your credit in full every month, or if not, at least repay the minimum due to save on any interest charges.

• Try to stay up to date with your repayment schedules. It’ll help your credit score improve.

• Opt for an automatic repay option, helping you be a good payer. 

Way 2: Skip On Using Multiple Apps 

When you apply for a home loan, your credit score plays a big role. 

If you are applying on numerous credit apps and getting rejected, it looks bad on your credit score. Thus, it lowers your credit score.  

Way 3: Check Your Information Regularly 

Keep track of your credit report for any errors or missing pieces of information. This consists of the most obvious details like your date of birth, your Emirates ID or even your address history – a small slip up could make a huge difference. 

Way 4: Mind Out Joint Borrowing 

When considering joint borrowing, like Home loan with your partner, remember your credit profile will be linked to theirs. 

In a scenario, where you’re trying to improve your score, consider asking your partner to do the same to help your chances of a successful credit score improvement. 

Plus, if you have a joint current account, how you both use it will affect both of your credit scores. For instance, if your partner is spending money and takes you into an unarranged overdraft, it could have records on both of your credit reports. 

Way 5: Don’t Pay Off Loans Early 

Never pay off loans before they mature, as a longer period of credit history is always considered better. So, if you keep making regular payments for a longer time period, credit scores will eventually improve. 

 

Surprisingly, in some jurisdictions, even closing bank accounts can have a negative impact as length of credit history plays a pivotal role in your credit score. It’s advisable to operate older accounts for a positive credit score. 

Finally…

At GetProp, we understand the importance of credit score in mortgage eligibility. Our panel of experts is dedicated to help borrowers navigate through the daunting mortgage process and maximise their chances of approval. 

 

Get in touch for personalised advice that not just enhances your creditworthiness but help you achieve your home ownership goal too.