A credit score is now something familiar to the people of the Emirates. Banks provide loans only on the basis of credit score and this credit score keeps fluctuating according to your monthly payment of credit card or any other loan bills. There are a lot of misconceptions revolving around the use of credit cards in UAE. Check out these myths regarding a credit score.
Myth #1 A new credit card will drop your credit score
A new credit card will not drop your credit score automatically. Credit score depends on your credit card payments. A new card can still be a burden for you which may cause delays in payments and ultimately decrease your credit score. It is advised to think deeply before you get a new credit card. If you can afford the monthly charges, then it is well and good.
Myth #2 Poor credit scores don’t matter much
It’s a myth which says a poor credit score doesn’t matter. A poor credit score can cost you a lot. When you apply for a new personal loan, your loan might get rejected if you have a low credit score and even if you get a personal loan or auto loan or mortgage loan you will be charged high-interest rates which can be double the regular interest rate. So a higher credit score can save a lot of hassle and money in the long run.
Maybe Interested: Know ADIB Card offers here
Myth #3 Too many credit cards will increase credit score
People believe that having too many credit cards will boost your credit score which is complete a myth. On the contrary, having too many credit cards will make you use each card less or not to use itself one or two cards. Which results in making you pay more than you have spent and if you don’t pay in time, this will affect your credit score ultimately. In fact, too many credit cards will lower your score from 10 to 50 points. Apply for additional credit cards only if needed.
Myth #4 Higher the credit limit higher the score
Credit limit has nothing to do with the credit score directly. It might affect your credit score only in an indirect way. As said earlier you would pay much more than you spent and late payments can make your credit score fall. Better opt for a credit card which provides a credit limit that is suitable for you. Along with the credit limit, also do check the interest rates which plays an important role in credit score. It is preferable to get a credit card which with low-interest rates.
Myth #5 Once a low credit score always be low
This is definitely a myth. A low credit score doesn’t remain low forever. A credit score can decrease at times, but it can improve if the payments are made on time. If the credit score is low, don’t worry. You can boost it easily by following a few simple steps.
Related: List of Credit Cards in UAE for a good Credit Score
A credit score is really important for getting a Home Loan, Auto Loan and Personal Loan in UAE. Know more about credit score before just jumping into the conclusion with the myths. Keep your dues cleared every time, and your credit score will keep going well.
About the author
Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.
