Common Mortgage Mistakes to Avoid in the UAE </h2 > Your credit score is one of the most important factors when applying for a mortgage. It acts as a financial report card that lenders use to assess your ability to repay the loan. A strong credit score can help you secure better interest rates and loan terms, while a low score can make approval difficult or even lead to higher costs. But how exactly does your credit score impact your mortgage approval? Let’s break it down in simple terms. Why Does Your Credit Score Matter? Lenders want to minimize risk. Your credit score tells them how responsible you are with managing debt. It reflects your history of borrowing and repaying money, giving lenders an idea of whether you’re likely to make mortgage payments on time. A high credit score means you are financially trustworthy, which makes banks and financial institutions more willing to offer you a mortgage with favorable terms. On the other hand, a low score raises red flags and may result in a higher interest rate—or even a rejected application. How Credit Scores Are Calculated Your credit score isn’t just a random number; it’s calculated based on five key factors: Payment History (35%) – This is the most significant factor. Lenders check if you’ve paid your bills on time. Even one missed payment can hurt your score. Credit Utilization (30%) – This refers to how much of your available credit you’re using. Keeping your credit card balances low (below 30% of the limit) is essential. Length of Credit History (15%) – A longer credit history generally improves your score. Lenders prefer borrowers who have demonstrated responsible credit behavior over time. New Credit Inquiries (10%) – Applying for multiple loans or credit cards within a short period can lower your score because it