A good credit score is more than just a number; it’s a reflection of your financial health and responsibility. In the UAE, maintaining a strong credit score can help you qualify for better loan terms, lower interest rates, and faster approvals. One of the most effective tools to build or improve your score is a credit card. When used smartly, it can help you establish trust with financial institutions and prove that you can manage your money responsibly.
Understanding How a Credit Score Works
Your credit score is calculated based on several factors, including payment history, outstanding debts, credit utilisation, and the length of your credit history. Every time you borrow money or use a credit card, the details are reported to the credit bureau in the UAE, which updates your score accordingly. A higher score means you’re considered less risky to lenders, making it easier to access financial products in the future.
Step 1: Use Your Credit Card Regularly — But Wisely
Having a credit card isn’t enough; how you use it matters. Regular, responsible usage shows that you can manage debt efficiently. Start by using your card for everyday purchases such as groceries, fuel, or bills, and ensure you don’t exceed 30–40% of your available limit. This is known as maintaining a low credit utilisation ratio.
Spending within your limit signals to lenders that you are disciplined. Maxing out your card, on the other hand, can hurt your score, even if you pay on time. So, small, consistent usage is far better than occasional large purchases.
Step 2: Always Pay on Time
Timely payments are one of the biggest contributors to a healthy credit score. Even a single missed payment can negatively impact your record. To avoid missing deadlines, set up automatic payments or calendar reminders for your credit card bill.
If you can, pay the full amount rather than just the minimum due. This helps you avoid interest charges and keeps your balance under control. Consistent, on-time payments show lenders that you’re reliable, which gradually boosts your credit score.
Step 3: Keep Old Accounts Open
Many people make the mistake of closing old or unused credit cards once they pay off the balance. However, keeping those accounts open can work in your favour. The length of your credit history is an important part of your score. The longer your account has been active and in good standing, the better it is for your credit profile.
Even if you don’t use an older credit card regularly, consider making a small transaction every few months to keep the account active. Just ensure it’s paid off quickly.
Step 4: Monitor Your Credit Report
Regularly checking your credit report allows you to spot errors or inconsistencies that might affect your score. In the UAE, you can obtain your credit report from the Al Etihad Credit Bureau (AECB). If you find mistakes such as incorrect balances, duplicate accounts, or outdated information, report them immediately to have them corrected.
Monitoring also helps you understand how your financial habits impact your score. Seeing improvement over time can motivate you to stay disciplined with your credit card usage.
Step 5: Avoid Too Many Applications at Once
Each time you apply for a credit card or loan, a hard inquiry is added to your report. Too many inquiries within a short period can lower your score temporarily because it suggests you’re taking on more credit than you can manage.
Instead, be selective and apply only for cards that match your needs and eligibility. Review your current card’s benefits before adding another to your wallet.
Step 6: Consider a Zero-Balance Credit Card Transfer
If you already have existing debt, a zero-balance credit card transfer can be a smart option to manage it better. This allows you to transfer your outstanding balance from one card to another with a lower or zero interest rate for a specific period. Doing so can help you pay off your dues faster while avoiding high-interest charges.
By clearing off old debts using this strategy, you reduce your credit utilisation and improve your payment record, both of which contribute positively to your credit score. However, be mindful of transfer fees and ensure you pay off the amount within the promotional period.
Step 7: Limit Joint Credit Usage
If you share a credit card account with someone, make sure both parties manage it responsibly. Missed payments or overspending by one user can affect the credit score of both. Always communicate and set clear usage limits to avoid unnecessary complications.
Step 8: Be Patient and Consistent
Improving your credit score doesn’t happen overnight. It requires steady, consistent effort over several months. The key is to show lenders that you can handle credit responsibly, using your credit card wisely, making payments on time, and keeping your balances low. Over time, these habits will naturally raise your score.
Conclusion
A credit card can be a powerful financial tool when used strategically. From building a solid repayment history to managing your debt efficiently, it can help you strengthen your creditworthiness and open doors to better financial opportunities in the UAE.
Remember, improving your credit score is not about quick fixes; it’s about maintaining consistent financial discipline. Whether you’re starting fresh or recovering from past credit mistakes, every smart choice you make today will reflect positively on your future credit health.
