The concept of a credit score is one that is familiar to people in the United Arab Emirates.

Banks will only offer loans on the basis of an individual’s credit score, and that score can fluctuate depending on the individual’s payment of monthly credit card bills as well as any other loans.

Credit card use is ubiquitous in the UAE, and yet there are a number of myths and misconceptions in regard to how their usage can impact on a person’s credit score.

One common misconception is that your credit score will drop automatically the instant you are given a new credit card.

Credit card payments are the factors that impact on credit score.

Gaining a new credit card can become a financial burden and lead to late payment of bills that would impact your credit score, but just owning another credit card will have no effect.

It is important to think carefully about whether you can really afford a new credit card before you get one, but if you can, then there is nothing to worry about in regard to your credit score.

Another myth is that having a poor credit score does not matter in the UAE.

This is actually a very dangerous misconception, as a poor credit score can become very costly.

If you want a personal loan, then a poor credit score will likely result in that application being rejected.

Even if you are granted a personal loan, mortgage loan or auto loan, your poor credit score will likely mean much higher interest rates than would be the case if your credit score was good.

Sometimes, interest rates for loans for people with poor credit scores can be almost double those of the normal interest rate.

In the long term, ensuring that your credit score remains high will save you a lot of money and aggravation.

Another fallacy is that you can increase your credit score in the UAE by having lots of different credit cards.

This is another dangerous myth as the reality is almost the exact opposite.

Having too many credit cards will almost certainly result in you using all of the cards less often, and if you try to correct this, then you may spend more than you can afford to pay back.

Delayed payments will have an adverse effect on your credit score.

Extra credit cards should only be applied for if they are really needed.

Another myth is that your credit score directly affects your credit limit.

There is no direct correlation between the two, and it is important to choose a credit card that has a reasonable credit limit for your payment threshold.

Otherwise, you again risk spending over your budget, failing to make full payments and negatively impacting your credit score.

Interest rates also play a crucial part in determining credit scores, so always try to get a credit card that has low-interest rates.

It is also a myth that you are stuck with a low credit score for life in the UAE – a credit score can easily be improved simply by making payments on time.

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