How can I get a Loan with Bad Credit in UAE?
Personal Loan in Dubai can be used for almost anything these days. Immediate financial needs can be managed with this facility being offered by all banks and financial institutions in UAE. However, things might get difficult in case you do not handle your debt responsibly and miss out on payments or default. This straightaway hits your credit score which reduces your chance to avail a personal loan in the future.
Why do banks check credit score?
A credit score reflects your credibility. The score is based upon a number of factors and includes an assessment of your financial and debt repayment history. The credit report provided by AECB has all the financial information of an applicant right from the previous and existing loans, the number of credit cards, monthly income, and the credit score. For a person who is regular and makes timely payments of the loan installments, the score stands good and for a person who misses out on payments, the score comes as bad.
Being in debt is not easy and life can get very hard without money. So taking care of your finances is incredibly important and that responsibility lies with you. Banks can certainly offer financial assistance by way of loans and credit cards but it is always at their discretion. Relying on the bank to relieve you of your financial pain can only be an option if you are eligible.
How to get a Loan with Bad credit or Loan without a Credit Score Check?
- Online Lenders: There are few officially permitted private lenders in UAE, who provide loans for the applicants with low credit scores. Usually, private lenders provide no credit check loans. They just go through some documents to prove identity. However, the interest rate that these lenders charges is very high, sometimes 2-3 times higher than the bank. This makes it not so favorable option.
- Banks: Personal Loans are usually unsecured loans, and banks are very strict with lending decisions based on credit scores for unsecured loans. However, there are few secured loan options that banks and financial institutions offer without needing to check the credit score of the applicant. In this, the applicant has to pledge your assets like car, gold, etc., as collateral and get a loan against them. The interest rate is comparatively on a higher side which may vary from bank to bank.
- Credit Unions: Credit unions may have comparatively less strict requirements in terms of eligibility. They sometimes also run special programs for borrowers with not so good credit score. The interest rate definitely is higher than on a usual loan from banks.
- Loan against Credit Card: If you have a credit card, you can also get a loan against your credit cards in UAE. This, however, is not suggested as it comes with very high interest rates which become a huge burden in the future.
- Salary Advance: For a salaried individual, this can also be an option. There are multiple banks offering loans against monthly income. The interest on such loans is comparatively lower than those mentioned above.
Closing thoughts: Though there seem to be many borrowing options available even with a bad credit score in UAE, most of these are tagged along by the burden of huge interest rates. What seems favorable now may result unfavorable in the future. Hence, the best thing to do in case your score has gone down for any reason is to apply for a consolidation loan to wrap up all of your current debts. Approach your primary bank as well as other banks to request a debt consolidation and start saving the rest of your income. Avoid taking on extra commitments until you achieve the required financial stability. Try to improve your credit score which can have a higher impact at the time of need. According to a report, it would take a minimum 3 months to get out of a bad credit score. If you pay your credit card and other installments on time without any delays for 3 consecutive months there are chances of getting your credit score improved. Also, try to maintain the good score once you achieve it.
Published By : UAE Cash Loans Team
Published on : 17th June 2020