Given the ease with which many UAE residents seem to be offered bank credit, it can be hard to understand why your loan or credit card application was vetoed, particularly since not all banks will share their reason for refusal.

Yet, the reason may have nothing to do with you personally. Instead, it may have everything to do with whether you fulfill a certain set of criteria. Each issuer maintains its own list of measures against which all new credit applications are checked. These may include your income, credit score and debt burden ratio, but could also extend to your workplace.

To complicate matters, these factors may become more stringent during an economic slowdown (such as right now). So while you may not be told exactly why your application was denied, a quick look at some of these criteria against which applications for credit cards and personal loans are evaluated can help you understand how to improve your chances the next time around.

1. What’s your credit score?

Every financially active UAE resident, i.e. anyone with a bank account or a loan, has a credit score. This is a three-digit number between 300 and 900 that indicates your creditworthiness. The score is determined by the Al Etihad Credit Bureau. It tracks over 2,000 data points every day to automatically assess whether you’re likely to pay your bills on time, or whether you represent a credit risk.

People with higher credit scores are more likely to have credit applications approved. Citibank recently published an article explaining the concept of the credit score; it tells you how to access this important metric.

2. How much do you earn?

While you may consider your salary to be a private matter, you’ll need to share it with your bank to establish a new financial relationship of any kind. Each bank operating within the UAE requires applicants for credit cards or personal loans to have a minimum monthly salary. Depending on the bank, this may be a minimum of AED 5,000 - 10,000. If you earn less than minimum salary amount, you may have to apply to another bank or consider other ways of meeting your financial obligations.

Therefore, it’s worth asking a bank representative about minimum salary requirements before applying for a loan/card.

3. What’s your debt-burden ratio?

The relationship between any monthly loan instalments (such as those from car loans, personal loans, or other mortgages) or credit card commitments you may have to your monthly income determines your DBR – Debt burden ratio. As such, the DBR offers a clear picture of your financial health. Some banks may refer to it as your debt-service ratio or your income-to-instalment ratio.

Expressed in mathematical terms:

DBR=Total Debt/Total Assets.

In this case, the total debt is the sum of all your loan instalments, any instalment-based credit owed on your credit cards, plus 5% of the total credit limit of all cards in your name.

The UAE Central Bank limits the monthly instalments for unsecured loans to 50% of each resident’s monthly income – if your DBR is higher than that amount, you will be refused a new credit card or personal loan.

4. Where do you work?

Your employer doesn’t just pay your salary and sponsor your work permit in the UAE, the company you work may also determine whether you are granted a credit card or personal loan. If you’ve ever been told your employer is “not approved” or “not registered”, it’s probably because the company isn’t listed with the bank.

Each UAE bank has its own list of employers or companies against which all new account applications are checked. Banks do this to check whether your income or employment is secure, and whether your company is financially stable. Since the introduction of the Al Etihad Credit Bureau, these lists are now a little less important, but as a rule of thumb, large and well-known organizations are usually listed or registered. If your employer isn’t on such a list, you can still ask the bank if they accept as some banks accept applications even if the company is not listed.

5. How old are you?

Shy about revealing your age? You’ll need to if you want to take out a personal loan or a credit card in the UAE. Banks operating in the country typically require you to be at least 21 years old when applying for the loan, and under the age of 65 years when the loan matures. This is because they want to make sure you’re drawing a salary; someone outside this age range may not be earning enough to pay off a loan or credit card.

If you’re under 21 or over 65 years, then, your best bet is to seek other avenues of funding. Consider secured loans or add-on credit cards instead.

6. Have you provided all the documents required?

Last on the list but perhaps first in terms of importance is whether you’ve provided the papers the bank in question has asked for. Typically, banks in the UAE will require documents such as copies of your passport and Emirates ID and three months’ bank statements. Some banks may also request a letter from your employer confirming your job title and salary – particularly if you’re relatively new to the country.

It’s simple enough to ask the bank official for a checklist of these documents but be aware that an inability to provide one or more of them may result in your loan application being rejected in the UAE.

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