Experian Boost claims to be a quick and easy way to increase your credit score – without the need for additional credit. If this sounds too good to be true, your first question is probably: Does Experian Boost work? Shortly after: is it even safe?
One of the biggest paradoxes in personal finance is that of building up credit. If you don’t have credit (or worse, bad credit), it’s hard to get new credit. But you need credit to build your credit.
Experian Boost aims to tackle the problem by looking outside the realm of credit. No matter how much credit you have or don’t have, we all have bills. With Experian Boost, you can turn those bills into a viable credit history.
What is Experian Boost and how does it work?
For years, the credit bureaus virtually ignored people who didn’t have credit cards or loans. You can pay your electric bill and mobile phone service on time every month for decades without always having good credit.
This is changing now. Experian Boost uses your bank account history to track all utility payments and utility bills that have not been recognized. This positive bill payment history is then reflected in your Experian credit reports, potentially increasing your credit scores. And best of all, it’s free.
To use Experian Boost, all you need to do is go to the Experian website and register. You will provide your bank account information and allow Experian to analyze your payment history. You can then review and confirm the information you want to add to your report.
Your Experian credit scores will be updated as soon as you complete your Experian Boost registration. According to the company, the average user received a 13 point increase in their FICO® 8 score.
Unfortunately, rent payments are not included. But Experian Boost can find and include a variety of different bills, such as home utilities and communication services:
- The water
- Phone (s
- Mobile phones
- Streaming services
Yes, you read that right. Several major streaming services have been added to Experian Boost including: Netflix, HBO, Hulu, and Disney +.
Most major utility and communications companies are recognized by Experian Boost. However, if an invoice is not recognized, you have options. Boost will walk you through a question-and-answer form to identify the reason the account is not recognized. If you still believe the account should be eligible, you can submit the account information to Experian for internal review.
A positive payment history dating back up to two years may be included. However, you will need to have made at least three payments to the account in the past six months.
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 fairly strong credit history, you are unlikely to get huge credit. to reinforce add additional utility data.
On the flip side, people with no credit history or with limited credit history could benefit from Experian Boost. If you don’t have enough credit history to qualify for an Experian credit score, additional payment history may help you qualify. You may also see an advantage 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 claims that Boost improved scores by 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 other two consumer credit bureaus: TransUnion and Equifax. Experian Boost data will have no impact on your other credit reports. It is difficult to predict which credit bureau a lender will query. If they’re pulling your credit history and score from TransUnion or Equifax, Experian Boost data won’t help.
On the plus side, the Experian Boost data will apply to most credit scoring models that use your Experian credit report. This includes your base FICO® score, as well as more specific scores such as FICO® bank card scores and FICO® automatic scores.
Is Experian Boost safe to use?
Whether Experian Boost will actually help your credit can vary. Even if that doesn’t help, Experian Boost doesn’t to injure your credit score.
On the one hand, Experian Boost examines your bank details, not your credit history. This means that there is no credit check. Additionally, Experian Boost only includes on-time payments, which adds a positive payment history. So the invoice you paid three days later last year will not be included.
That being said, it is important to keep in mind that failure to pay your utility or other bills can hurt your credit score. But it would happen whether you were using Experian Boost or not.
If you are more than 60 days late, your provider may report your account as overdue to the credit bureaus. Payment history is 35% of your FICO® score. As such, late payments can seriously damage your credit. Plus, negative items, like late payments, can stay on your credit reports for up to seven years.
Who should use Experian Boost?
Experian Boost is best for people with no or very limited credit history. So if you don’t have any credit cards and / or loans yet, you might see some benefits.
Basically, you need at least six months of credit history reported to the credit bureaus to be eligible for a FICO® score. If you don’t have enough history, you are considered “unmarkable”. Boost can help you supplement your credit history. For some users, the additional data may be sufficient to qualify for a credit score.
If you already have a credit history, but not a lot, like a single credit card or a single loan, you can also benefit from Experian Boost. Additional payment history can help build your credit report and improve your credit scores.
As credit scores increase, the benefits of Experian Boost decrease. While 87% of people with a “very low” score saw an increase, only 63% of people with a “fair” score saw an improvement. People who already have good credit are likely to see little or no benefit.
Other ways to create credit
No matter how well Experian Boost works for you, it is not a complete solution for building credit or repairing credit. You are not going to go from having no credit score to having a great credit score just by paying your utility bills on time.
The best way to build your credit history is to use credit responsibly over time. This includes paying your credit cards and loans on time every month. You should also focus on keeping a low credit utilization rate (how much credit you use versus what you have).
However, you need credit to create credit. If you’re having trouble getting started, there are a few methods you can use.
Open a secure credit card
Having zero credit (or bad credit) can make it difficult to get a regular, unsecured credit card. Secured credit cards are much easier to obtain as they require a cash security deposit. This protects the credit card issuer if you cannot pay off your balance.
With most secured cards, the size of your deposit will dictate the size of your spending limit. For example, if you deposit a deposit of $ 200, you will usually get a spending limit of $ 200.
Besides depositing, secure credit cards work the same as unsecured cards. You can use them to make purchases, including online purchases. Then you will receive an invoice every month.
If you pay your credit card bill in full and on time each month, you’ll create a positive payment history. Over time, your credit scores should improve. Most secured credit cards will upgrade you to an unsecured card after your credit improves. When your account is upgraded – or you close it in good standing – your deposit will be refunded in full.
Obtain a manufacturer’s loan
Credit loans are a somewhat new addition to the world of credit. They are specially designed for people who need to build credit or rebuild bad credit.
Unlike a regular personal loan, a home builder loan does not give you money up front. Instead, when you take out a credit loan, the money is deposited into a blocked savings account. Then you will make monthly payments (including interest) for the duration of the loan. As long as you pay off the loan in full, you will have access to the money in the account at the end of the loan term.
The loan – and your payments – will be reported to the credit bureaus each month. If you make your payments on time, you will increase your credit and improve your credit scores.
Loans to credit builders generally have short terms ranging from six months to 24 months. They are also quite small, with loan amounts varying on average between $ 300 and $ 1,000. This helps reduce monthly payments. (The goal is to build a positive payment history. The size of the loan is not important here.)
Become an authorized user
Each credit card has a primary cardholder; this is the person who opened the account. However, many credit cards also allow authorized users. If you need to build credit quickly, this may be the best option.
Authorized users are much like guests, but for credit cards. Users receive a card in their name, linked to the account. You can make purchases as if the account belongs to you, but you don’t. You are not the owner of the account and you are not financially responsible for it. You also cannot close the account, change account information, or take any other action.
Although authorized users are not responsible for the account, it Is impact them. This is because most issuers report the account to the credit bureaus for both the owner and authorized users. If the account is old and in good standing, it may help the Authorized User by adding to their credit history.
The flip side is that the authorized user could cause problems for the account owner. If the user spends too much, the primary cardholder is the one who pays, literally. The account holder is the one who is legally and financially responsible for paying the debt.