The UAE’s Al Etihad Credit Bureau (AECB) is reported to be weeks away from making credit reports available to individuals and banks. So, how will this new service affect you? Souqalmal.com team finds out.

The AECB, a government company specializing in supplying credit reports to banks and individuals, will allow residents to access their own credit reports by the end of this month. For banks this will make it easy to assess the credit-worthiness of a prospective client.

[Related: How do I improve my credit score?]

But how does it affect me?

Well, it means that when you apply for a loan, a bank can contact the bureau and check what loans and credit cards you have to assess if you are already in too much debt. If, let’s say, you’ve taken out endless credit cards and loans with different banks – leveraging your debt far higher than the 50 per cent recommended by the UAE Central Bank – this will not work in your favor.

The bank will be able to assess your payment history as any missed or late payments or bounced cheques will be recorded on your report. If your financial behavior hasn’t been up to scratch, securing that loan will be tricky.

While the bank may still decide to go ahead with the loan, they may charge you a higher rate of interest as they will consider you a high-risk candidate.

On the flip side, those with a good financial track record i.e. that have kept their debt burden to a minimum and have always made payments on time, could be offered more attractive profit rates on personal loans, mortgages and car loans. Basically, your financial affairs will now be laid bare for the banks to see. You can no longer hide what liabilities you have in your name – because banks can instantly check if you are telling the truth.

What will the reports contain?

According to Marwan Lutfi, the bureau’s CEO, the reports will contain your credit history in the UAE over the last two years with all defaults, delinquencies and bounced cheques in that time frame recorded. However, there will be no information about the loans, credit cards, mortgages etc. that you hold overseas.

What’s next for the Credit Bureau?

Well, commercial credit reports will be available later this year as the bureau will compile records of all commercial companies that operate locally including joint-stock companies.

Then, in the final stage of the roll-out process, residents will all be issued with a credit score. This is a system used by many other credit reference agencies around the world with the score, a measure of a customer’s credit worthiness. It’s determined by factors such as your credit history or number of years you have lived in the UAE. In the future your store cards, phone bill repayments, utility payments will also count towards this. Eventually, every aspect of your financial behavior will be measured.  According to bureau chief Lutfi, credit scoring will come into effect at the end of next year

Finally, to strengthen the Credit Bureau’s remit even further, the company has been tying up with the Saudi Credit Bureau (SIMAH) and the Qatar Credit Bureau (QCB). A senior team from the company, led by Lutfi, recently visited the neighboring nations to exchange ideas and plans for credit bureaus across the region. With regional credit monitoring, it would make it even harder for residents to get themselves into serious debt. It can only be a positive move.