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How credit worthy are you?

Al Etihad Credit Bureau (AECB) has finally launched and will roll out its operations in phases. Zoya Malik met a spokesperson at AECB to find out how the bureau will help banks with risk management and consumers get access to finance

What are the aims of the AECB?

"Al Etihad Credit Bureau (AECB) is a Federal Government Company established under a UAE Federal Law No. (6) issued in 2010, and was set as a public company, mandated to implement and operate a new credit reporting system across the UAE. The bureau aims to further develop the financial structure of the UAE, add transparency and aid clarity around borrowing and individual debt levels, and it will help banks better assess the risks they take in lending to individuals."

How and what type of data will be exchanged between banks and the credit bureau?

"Currently, Al Etihad Credit Bureau collects credit information on all UAE nationals and residents, from banks, financial institutions and telecommunication companies operating in the UAE for the past 24 months and create a Credit report. This data includes credit facilities, credit applications, payment- behaviour and debt records."

How will banks use this data to assess risk and lending to borrowers?

"The credit reports will play a key role in helping banks and financial institutions to assess risk accurately by analysing applicants credit report, enabling them to make informed lending decisions and lower lending risks."

How will the advent of the credit bureau help in growing good lending?

"The reporting system of the Al Etihad Credit Bureau will add value to the UAE's financial sector by enabling lending institutions to make informed decisions and it will encourage consumers to practice responsible debt management; this will in turn reduce credit losses from bad or non-performing debts. AECB is committed to supporting the financial sector with tools that will improve their lending procedures, in line with international risk management standards. Those who maintain a good credit will also benefit from greater access to capital and better interest rates."

How will consumers / bank customers benefit from the credit bureau in terms of borrowing?

"These credit reports will help individuals to understand their debt levels and have a clearer picture of their financial obligations. This will in turn enhance their ability to plan for future borrowing and manage their finances responsibly. Those who maintain a good credit will also benefit from greater access to capital and better interest rates.

"As the bureau provides the financial services industry with better credit information, it will help them to assist banks with their lending decisions, and enable the private and public sector to form better and more comprehensive strategies concerning loan-related decisions. Therefore, enhance loan classification and reduce defaults."

What are the operational roll out phases for the credit bureau?

"The Bureau will implement its second phase during the coming period. This includes issuing credit reports on all companies operating in the UAE, bounced-cheque details and telecommunications companies' payment information for the past 24 months. The Bureau will announce the launch of other services in the future, which will be implemented throughout various phases. Specific dates will be announced early next year."

What can retail borrowers expect from the credit bureau in terms of individual credit rating and credit worthiness? When will this happen?

"Credit rating is due to come next year. Further information and details will be announced next year."

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Publication:CPI Financial
Geographic Code:7UNIT
Date:Dec 17, 2014
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