Al Etihad Credit Bureau Enhances Reports with Salary Data for Creditworthiness Assessment

The Al Etihad Credit Bureau (AECB) announced a significant expansion of its credit report data to include monthly salary information for 3.71 million customers.This move,implemented in the first quarter of 2024,bolsters the UAE's credit reporting system by providing a more comprehensive picture of an individual's financial health.

Previously,AECB credit reports focused on a borrower's history of debt repayments,including loans,credit cards,and outstanding balances.The inclusion of salary data allows lenders and other stakeholders to assess an applicant's capacity to repay a loan based on their income.This can potentially lead to more informed lending decisions and a more efficient allocation of credit.

Marwan Ahmed Lutfi,Director General of AECB,emphasized the significance of the development."Incorporating salary data into credit reports is crucial for providing a complete view of a customer's creditworthiness," he said."It helps stakeholders accurately assess an individual's ability to fulfill financial commitments."

The AECB's decision aligns with a global trend of credit bureaus incorporating alternative data sources into their reports.By leveraging a wider range of information,lenders can move beyond traditional credit scores to create a more nuanced understanding of a borrower's financial situation.This can benefit borrowers with limited credit history or those who rely on income sources not reflected in traditional credit scores.

However,the inclusion of salary data has also sparked privacy concerns.Critics argue that providing employers with direct access to employee salary information could lead to discriminatory practices.The AECB has assured users that the salary data is collected with their consent and is only accessible to authorized lenders and financial institutions according to UAE regulations.

The expansion of credit report data is part of the AECB's ongoing efforts to create a more robust credit reporting system in the UAE.A more comprehensive credit reporting system can facilitate financial inclusion by making credit more accessible to individuals who may have been excluded from traditional lending practices.It can also benefit lenders by enabling them to make more informed lending decisions,potentially reducing bad debt and improving overall financial stability.

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