Content of the material
- The Impact of New Scoring Programs Today
- My third Experian Boost
- Pros Cons
- Is Experian Boost Worth It?
- How Does Experian Boost Work?
- What Do You Need to Use Experian Boost?
- Downsides of Experian Boost™
- Bottom Line
- Who should use Experian Boost?
- How to sign up for Experian Boost
- Who Will Experian Boost Benefit?
- Can Experian Boost help your credit?
- Pros and cons of Experian Boost
- Advantages of Experian Boost
- Downsides of Experian Boost
- Other Ways to Add Payments to your Credit Report
The Impact of New Scoring Programs Today
Experian isn’t the only company experimenting with nontraditional credit scoring methods.
TransUnion uses a product called eCredable Lift to similarly add 24 months of utility payment history to your credit report by accessing your utility accounts directly instead of your bank account. This program works with your TransUnion FICO Score 8 and VantageScore 3.0, even if you have no credit history at all and costs $19.95 annually.
Beyond the credit bureaus, FICO also recently introduced a new credit scoring model to help pad thin credit profiles. The UltraFICO Score goes beyond just utility payments, accessing banking history such as savings balances, length of account history, frequency of transactions, and more to supplement your credit information. Even if you don’t have enough credit history to generate a traditional FICO Score, you can receive an UltraFICO Score.
Ultimately, it’s a positive trend for these institutions to begin assisting people with little access to traditional credit, says Cristina Livadary, CFP, of Mana Financial Life Design, a financial planning firm in Marina Del Rey, California.
“It’s one of the things that kids are never taught in school,” she says. “Having good credit really determines your access to some of the things that are important to acquire when becoming an adult.”
Your recurring monthly payments already work similarly to credit or loan payments, says Rod Griffin, senior director of public education and advocacy at Experian. “You have a service, you receive it and use it in advance, and then pay for it in the future, just like a loan you get and pay back over time.”
My third Experian Boost
I’m not a Boost addict, I swear. This time, I’ve done it for you, dear reader. Before I started writing this article, I decided to boost again because I had some data to add. I was paying for the Internet with a card I hadn’t connected yet. Plus Experian now lets you report your Netflix payments.
Boosting my FICO score while binging Bridgerton? Yes, please.
So I’ve boosted again. This time, I’ve added all of my credit card accounts, just to be sure every eligible payment will count toward my score. I didn’t expect much, but I wanted to get the most out of the service.
My score has increased by 13 points, taking my score to the next credit tier—from “fair” to “good”.
Now my FICO score is at 680, and in total, Experian Boost has raised my score by 22 points. It’s less of a boost than other users report. But without it, it could take me another year to reach good credit. Now that years of fair credit are officially behind me, I may qualify for some of the most exciting credit cards (I’m looking at you, Chase Sapphire Preferred® Card), and I’m considering refinancing my car loan.
Experian Boost can be an effective way to help your credit. That doesn’t mean it’s the right move for everyone.
- It’s free.
- Adding more positive information to your Experian credit report can have a very positive impact if your credit report has very few accounts.
- Experian claims the average credit score improvement is 14 points. That could make a big difference for some people, especially if you cross over one of the major score thresholds from “poor” to “fair”, and from “fair” to “good”.
- If you have late payments, it won’t hurt your credit score since Experian doesn’t know about your late payments. Since they won’t be included in your credit report they can’t affect your credit score.
- You have to give Experian access to your online checking account. This is a non-starter for some people who are concerned about the security of their checking account.
- You have to pay all of your utility bills from your online checking account. This is the only way Experian Boost can scan your checking account to look to payments to utility companies. This means you can’t use a credit card to pay your bill and earn reward points.
- It only works for people who already have a credit file.
- Because Experian Boost only reports positive payments, some lenders may not use these accounts when they calculate your credit score.
- Experian Boost only helps your Experian score. It won’t help your scores at the two other major credit bureaus, TransUnion and Equifax.
Experian Boost works best for people with thin credit files. If you have 20 years of payment history, have owned multiple credit cards, and had a car loan and home loan, adding proof of utility payments will not have the impact that it would have for someone with a thin credit file.
Is Experian Boost Worth It?
Experian Boost is a free feature that can help you raise your FICO® Score in a matter of minutes. For anyone who has worked to improve their credit scores over months or even years, seeing those credit scores go up instantly can be extremely rewarding.
Having a good credit score not only makes you feel good, but it can also help you save money and expose you to new financial opportunities. Your improved FICO® Score may help you get a favorable interest rate on a new loan, which could save you hundreds or even thousands of dollars over the life of the loan. Your improved credit score may also make you eligible for a new type of credit. These positive outcomes make Experian Boost worth it for many consumers.
How Does Experian Boost Work?
The process starts by signing up for a free Experian membership. Then consumers give read-only permission for Experian to securely connect to their online bank accounts used to pay their utility and telecom bills. Experian will identify these payments, ask for verification that all the accounts are accurate, then add the accounts to their Experian credit file. The whole process takes about five minutes.
What Do You Need to Use Experian Boost?
Payments for utility and phone companies, including AT&T and Spectrum, qualify for use with Experian services. You can also get credit for payments for streaming services like Hulu, Disney+, HBO, and Netflix.
Downsides of Experian Boost™
Though Experian Boost is a great feature for consumers who might not have a strong credit file, it isn’t perfect. Here are a few downsides of the feature:
- If you’re a long-time avid credit card user who charges everything for the rewards points and pays your bill on time and in full, Experian Boost may not be very beneficial. Your credit history already includes the payment history from your credit card payments (which are reported by the card issuer). Adding a few more on-time payments is unlikely to have a large impact on your credit scores. Experian Boost is most beneficial for users who do not have a very robust credit file.
- Lenders might be using a version of a FICO Score or a different credit scoring model that doesn’t work with Experian Boost. There’s no guarantee that using Experian Boost will increase your odds of approval for a specific credit product from a specific lender.
- Experian Boost looks at cell phone, utility and service payments. It would be more helpful if it could include rent payments as well. It is possible to get rent payments added to your credit report, though—here’s how.
- As Experian itself points out, adding utility payments to its records won’t affect what’s in your files with the two other major credit bureaus–Equifax and TransUnion. So depending on which bureau a prospective lender or credit card issuer uses, Experian Boost may not help you get approved.
Experian Boost can have a positive impact on your score, and may even propel you from one scoring category to another, helping you qualify for better lending terms on loans and credit. But it’s only a small piece in the bigger picture of improving your credit score.
Consider Experian Boost or other new scoring methods as a tool, but continue to practice the good credit habits that will lead to lasting excellent credit, too. Make timely payments in full on all your accounts, keep your utilization ratio low, and be smart about the lending products you choose to pursue.
Who should use Experian Boost?
Experian Boost is best for people with no — or very limited — credit history. So, if you don't already have credit cards and/or loans, you could see some benefits.
Basically, you need at least six months of credit history reported to the credit bureaus to qualify for a FICO® Score. If you don't have enough history, you're considered "unscorable." Boost can help fill out your credit history. For some users, the extra data can be enough to qualify for a credit score.
If you already have some credit history, but not a lot — such as a single credit card or loan — you may also benefit from Experian Boost. The extra payment history can help flesh out your credit file and improve your credit scores.
As credit scores increase, the benefits of Experian Boost decrease. While 87% of people with a "very poor" score saw an increase, only 63% of people with a "fair" score saw improvement. People who already have good credit will likely see little to no benefit.
How to sign up for Experian Boost
You can start the signup process by visiting Experian’s homepage. Click the ‘Start your boost’ button to begin.
Experian will ask you to provide your full name, your current address (and possibly your previous address, if you haven’t lived at your current place for six months or more), and your email address. You’ll also be asked to create a password.
With that information, Experian will match you with your credit report and score. Once you’re in, you’ll see your FICO score and a note saying it hasn’t been boosted. Click on that note to start the boosting process.
Experian also offers some information about the process, but you can skip the tutorial if you don’t have a lot of time. Experian will ask you to find your bank and provide your login details to connect your account. For convenience, the credit bureau provides shortcuts for a handful of major U.S. banks.
You’ll select the account that you use to pay your bills and click ‘Continue’ at the bottom of the page. If you use more than one bank or credit card account to pay various bills, you can also add those. Once you’ve connected all of your accounts, Experian will take a couple of minutes to scan until it finds payments it can use.
Specifically, the tool searches for bills that have a history of three or more payments over the last six months. If it finds something, it’ll let you know and you can continue to the next screen.
Experian will show payments that it’s ready to add to your credit file, as well as others that just need some more payment history to qualify or are pending for other reasons. At this point, you can review the accounts the program wants to add and decide which ones you want to include in your Experian credit report.
Updating my credit file took just a few seconds, yet my FICO score ended up staying the same. Even without an immediate boost, however, Experian notes that your credit history benefits from more on-time payments, so not all is lost.
The credit bureau also notes that you can remove the information you added through Experian Boost at any time.
Who Will Experian Boost Benefit?
One of the most exciting things about Experian Boost is that it’s a free tool designed to help those consumers who struggle most with building credit. According to Experian research, 75% of consumers with FICO® Scores below 680 saw an improvement in their credit scores with Experian Boost.
Can Experian Boost help your credit?
The short answer is: maybe. How much (or even if) Experian Boost helps your credit rating will depend a lot on your existing credit history. For example, if you already have a pretty robust credit history, then you're not likely to see a huge credit boost from adding the extra utility data.
On the other hand, folks with no or limited credit history could benefit from Experian Boost. If you don't have enough credit history to qualify for an Experian credit score, the extra payment history could help you qualify. You may also see a benefit if you have a low credit score due to your limited credit history.
According to Experian, 10% of people with thin files are eligible for a credit score after using Boost. The company also says that Boost improved the scores of 75% of people with a FICO® Score below 680.
One thing to note is that Experian Boost only works with your Experian credit report. You have credit reports from the two other consumer credit bureaus: TransUnion and Equifax. Experian Boost data won't have any impact on your other credit reports. It's hard to predict which credit bureau a lender will query. If they pull your credit history and score from TransUnion or Equifax, the Experian Boost data will not help you.
On the plus side, Experian Boost data will apply to most credit scoring models that use your Experian credit report. This includes your basic FICO® Score, as well as more specific scores like FICO® Bankcard Scores and FICO® Auto Scores.
Pros and cons of Experian Boost
Experian Boost is worth signing up for if you’re looking for an easy way to boost your credit score. However, the service has limitations, so you shouldn’t expect any miracles.
Let’s take a look at the advantages and disadvantages of Experian Boost.
Advantages of Experian Boost
Experian Boost has three main benefits:
- Zero cost: There are other companies (like LevelCredit, for example) that offer similar services that add your regular monthly payments to your credit report, but most of them cost money. In contrast, Experian Boost is free.
- Immediate score improvement: Unlike most other methods for building your credit, Experian Boost instantly updates your credit report, giving you an immediate increase in your credit score after you’ve registered. 7 This can help you qualify for credit and loans with more favorable terms, such as lower interest rates.
- No risk: Signing up for Experian Boost won’t cause a drop in your credit score, even if you’ve missed bills in the past. This is because Experian only adds on-time payments to your credit report.
Downsides of Experian Boost
Experian Boost has several drawbacks:
- Less effective if you have good credit: If you already have a solid payment history and a good credit score, Experian Boost isn’t going to have a substantial effect on your credit. According to Experian, a full 21% of people with poor credit who have used the service were able to boost their FICO score into the “fair” range, but only 3% of people with “good” credit saw their score move into the “very good” range. 6
- Doesn’t affect your Equifax or TransUnion credit scores: As mentioned, Experian Boost only adds your payments to your Experian credit report. This means that your TransUnion and Equifax credit scores won’t increase when you sign up.
Other Ways to Add Payments to your Credit Report
There are several other systems that let you add regular payments to your credit report.
Experian RentBureau adds rent payments to your Experian credit report. It’s free and easy to use. Your landlord will have to be willing to participate.
eCredable Lift is a service similar to Experian Boost but run by TransUnion. Using both Experian Boost and eCredable Lift will place your utility payment records on two of your three credit reports.
These services have limitations. The change in your credit score won’t be dramatic, and it will only affect one credit report.
On the other hand, Experian Boost is free (there’s a fee to use eCredable Lift). These services are easy to use and pose little or no risk. What have you got to lose?