Getting a credit score when you’re first starting out can be frustrating. Many lenders are hesitant to extend credit unless you have prior credit history. With a free product called Experian Boost, credit bureau Experian hopes to alleviate that Catch-22 for credit novices.
Takeaways to remember:
- Your phone, streaming, and utility payments “count” toward your Experian credit score when you use Boost.
- Boost scans your bank transactions for payments and only displays information that is positive.
- To allow Experian access to your accounts, you must provide sufficient personal information.
- Experian credit scores are the only ones that will be affected.
- Boost is one of several options for improving your credit score.
- The goal is to help thin-file customers — especially those with little credit history — by incorporating signs of responsible financial behavior that credit reporting bureaus don’t typically see. People who are rebuilding their credit after a financial setback may also benefit from Boost.
- Examine the factors that affect your score.
- Learn about the factors that go into your score and what actions you can take to improve it.
What is Experian Boost and how does it work?
Allowing the product to scan their bank account transactions to identify streaming, utility, and cell phone payments is required for consumers to use Boost. Payment information will appear in their Experian credit report and will be used to calculate certain credit scores based on that data.
According to Experian, Boost only considers positive payment history, so missed streaming, utility, or cell phone payments will not affect your score. Payments that aren’t made are noted on your credit report and can lower your score, which is not the case with credit scores.
On Experian’s website, consumers sign up for a free membership and allow access to connect their online bank accounts in order to use Boost. The streaming, utility, and cell phone payments are then identified by Boost. In real time, you’ll receive an updated FICO score after a consumer verifies the data and confirms that they want it added to their Experian credit file.
Is Experian Boost effective?
When a lender checks your credit, the three major credit bureaus, Experian, Equifax, and TransUnion, may pull your credit score or view your credit report.
Your credit scores come in a variety of formats, including FICO 8 (the most commonly used score) and VantageScore 3.
Lenders will only see the effects of Boost if they look at your Experian credit report or use Experian data to pull your FICO 8, FICO 9, VantageScore 3 or VantageScore 4 credit scores.
One disadvantage of using Boost is that, because not all lenders are aware of it, they may see streaming, utility, and cell phone payments on your credit report and consider them part of your debt load, lowering your chances of getting a loan or credit card. “We’re working with lenders to ensure they understand these positive payments,” Experian says.
Boost vs. UltraFICO and other credit-building options
Experian is also collaborating with FICO on another product aimed at thin-file consumers. The UltraFICO score, which began as a pilot in 2019 and will be fully implemented in the spring of 2020, will also require access to your bank account data in order to assess your financial behavior. Instead of utility payments, the score considers how much money you have in savings and whether you have any checking account overdrafts.
Boost and UltraFICO currently only affect your Experian credit report and scores based on that information. There are other things you can do to improve your credit, and the effects of these actions can be felt by all three credit bureaus:
Obtain permission to use someone else’s credit card as an authorized user. You benefit from someone’s good credit habits when they add you as an authorized user to their existing credit line. Make sure the card informs the credit bureaus about authorized users.
Make an application for a secured credit card. A deposit secures this starter card, which also serves as your credit limit. It’s best to set up autopay and add a small recurring charge to it. Because it’s a small charge, you’re not maxing out your credit card, which can lower your credit score. The automatic payment protects you from making a late or forgotten payment, which can lower your credit score.
Make use of a credit-building loan. This type of loan is typically offered by credit unions, and it helps you build credit and save money at the same time. It calls for a monthly payment to be made into a separate savings account until the loan is paid off.
Make use of a service that allows you to report your rent. Some companies will report your rent payments to credit bureaus, allowing you to improve your credit score.
It takes time and patience to build credit, and it’s important to keep track of your progress.
Who can benefit from Experian Boost?
Experian Boost markets itself as a service for people who have a “thin” credit file, which Experian defines as having fewer than five credit accounts. People who have never taken out a loan or used a credit card may benefit from the service.
This is due to the fact that Experian Boost allows you to tap into the positive payment history of bills that don’t normally appear on your credit report. Experian Boost, for example, lets you get credit for three accounts if you’ve never had a credit card but pay for a cell phone, internet service, and Netflix each month.
Experian Boost is also useful for people who are on the verge of improving their credit score but need a boost to get there. The average Experian Boost user sees a 13-point increase in their credit score, according to Experian.
Experian Boost’s Advantages and Disadvantages
Experian Boost has both advantages and disadvantages. Before you sign up, here’s a quick rundown of what you should know.
Experian Boost’s Pro:
Experian Boost has a number of advantages. The following are some of the benefits of using the service:
Experian Boost is a completely free service. In comparison, credit repair companies charge around $100 per month on average.
Experian Boost helps you build credit by adding telecom and utility accounts to your credit file, which aren’t typically reported. This good payment history can help you raise your credit score and “thicken” your credit file if you have a thin credit file.
Experian Boost will report utility and telecom accounts as far back as 24 months, which will lengthen your credit history. This can help you improve your credit score by adding valuable credit history to your credit file.
Improve your credit score right away – When you sign up for Experian Boost, your new accounts are immediately linked, allowing you to see your improved credit score.
Experian Boost’s Cons
Experian Boost can be a useful tool for some customers, but it does have some disadvantages.
Experian Boost is only available to people with a FICO 8 credit score. Experian Boost will not affect your score if a bank or other lender uses a different scoring model.
Only affects your Experian credit score – This service is only for your Experian credit report. Your Equifax or TransUnion credit reports are unaffected by Experian Boost.
You must link your account to your bank account – To use Experian Boost, you must grant the service access to your bill-paying bank account. It uses 256-bit SSL encryption, according to Experian, but some customers may be hesitant to link the service to their account.
How to sign up for Experian Boost and use it
It’s simple to sign up for Experian Boost. In four simple steps, you should be able to sign up.
1. Create an account with Experian Boost.
To begin, click the “start your boost” button on the Experian Boost homepage to create a free Experian Boost account. This will take you to a registration form where you’ll be asked for basic information like your name, address, and birth date.
2. Make a bank account connection
You’ll be prompted to link your Experian Boost account to your bank account after you’ve created it. Experian claims to have read-only access to your banking information and does not save your bank login credentials.
3. Decide which accounts to include in your report.
After that, you must choose which telecom and utility accounts Experian Boost should report. You can choose to select or deselect accounts at any time.
4. Get your credit score updated.
Experian Boost will automatically recalculate your score once it is linked to your bank account and reporting new accounts. Many users, according to Experian, notice an immediate improvement.
Experian Boost Frequently Asked Questions
The following are some of the most frequently asked questions about Experian Boost, along with their answers.
Is it safe to use Experian Boost?
It uses 256-bit SSL encryption, which is the same level of encryption used by banks and other financial institutions, according to Experian. Experian also claims to have read-only access to customers’ banking information and bank statements.
Experian Boost raises your credit score by how much?
Experian claims to have helped people raise their credit scores by a total of 29 million points, with the average Boost user seeing a 13-point boost.
However, your individual results may differ depending on how many telecom or utility accounts you have and how long you’ve had them.
Is Experian Boost a credit bureau that reports to all three credit bureaus?
No, Experian Boost only updates your credit report with information from Experian. This means that any credit boost you receive will not appear on your Equifax or TransUnion credit reports.
Will my Experian Boost score be used by lenders?
Only your FICO 8 score is affected by Experian Boost. Although 90% of lenders use the FICO scoring model, not all of them use FICO 8.
The Experian Boost score, for example, will not appear in a lender’s analysis of your financial data if they use an older FICO scoring model.
What is Experian Boost’s catch?
The main disadvantage of Experian Boost is that it requires you to link your bank account. While Experian uses bank-level encryption, some customers may be wary of disclosing financial information to a third party.
Is it possible that Experian Boost will harm my credit score?
Experian Boost only shows you your positive payment history, never your negative payment history. As a result, you don’t have to be concerned about the service lowering your rating.
Is Experian Boost a good investment?
Experian Boost may or may not help, but it certainly can’t hurt, according to most consumers. Even if it doesn’t result in a significant increase in your score, it’s better than nothing.
Finally, because the service is free, you will not lose any money if it proves to be a dud for you. You can also unlink your bank account whenever you want.
Final Thoughts Experian Boost Reviews
While there’s no guarantee that Experian Boost will help you improve your credit score, it’s free and worth a shot. You’ll also get free Experian alerts and credit monitoring, which can help you keep track of your credit score while you’re rebuilding.