Credit reports will now reflect legal financial obligations in the UAE

The use of credit reports by banks and other service providers is on the rise.

A court-ordered legal financial obligation will now be reflected in the credit reports of individuals and companies, it was announced on Tuesday.

As part of this expansion, Al Etihad Credit Bureau (AECB), a UAE federal government entity that supports credit decisions, collaborated with the Ministry of Justice.

Marwan Ahmad Lutfi, CEO of AECB, said: “AECB’s credit registry, now expanded to include court-imposed financial obligations, is the result of a two-year effort in which the bureau worked closely with the UAE Ministry of Justice. At AECB, we believe this expansion of data and analysis will deepen the scope of our credit reports and provide a comprehensive view of an individual or company’s creditworthiness. Most importantly, it will enable lenders to better assess credit risks, such as the borrower’s ability to meet credit obligations or make future payments.”

Regulatory and financial affairs of the country's federal court system are overseen and regulated by the Ministry of Justice. Additionally, the ministry oversees all legal matters in various federal ministries and prepares and implements laws relevant to civil and commercial disputes. There have been more than 36,000 active judgments issued by the ministry imposing payment obligations on more than 84,000 individuals and companies.

In addition to banks, financial institutions, telecommunications providers, government agencies, and a growing number of businesses, AECB's credit reports are becoming more and more popular.

What is a credit report?

According to the AECB, a credit report is a document that includes personal details, all credit facilities, bounced cheque information and payment history for up to five years. It also includes balances and payments of monthly telecom, water and electricity bills.

The report is used by banks, financial companies, telcos and other institutions to analyse their customers’ financial standing and evaluate credit risks.

What is a credit score?

There is a range of 300 to 900 possible credit scores. Risk is lower when the score is higher. Scores help predict whether an individual or company will miss payments in the near future.