The New Experian Boost Only Promises Improved Credit Scores
- September 9, 2020
- 6 min read
- 1764 reads
What is Experian Boost?
Experian Boost is a service that can help consumers with low or no credit history increase their FICO® Score.
How Does Experian Boost Work?
Experian Boost gives consumers credit on timely utility bills that do not usually factor towards your credit score. It works by taking your bank records as proof of on-time payments for your phone and some streaming services such as Netflix to increase your credit score.
Why is Good Credit Important?
Credit scores are absolutely vital. They’re used to determine if you’ll be approved to rent an apartment, get a car loan, get a mortgage, etc. There is a saying that “bad things happen to bad people,” but the truth is bad things can happen to good people as well.
Uneducated spending, identity theft, medical bills, and a host of other issues can cause even the best of us to miss payments. If late payments cause you to create a collections account it will show up on your credit report for up to 7 years.
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While there are ways you can address removing a lot of these negative remarks from your credit report, Experian has launched the Experian Boost program with the promise of reconciling some mistakes and possibly improving credit for people that have low to fair credit.
How Does Experian Boost Your Credit Score?
Experian Boost has decided to become more lenient and inclusive on their grading by allowing you to factor in bank account data to gauge your financial behavior. The program can improve credit scores for over 60% of users. In a pilot test of thin-file consumers, the Boost managed to help two out of every three consumers improve their score by more than 10 points.
Experian Boost Review
The Experian Boost only affects Experian scores, meaning your TransUnion and Equifax score are not directly tied into this new grading algorithm. That said, the new Experian Boost only has the potential of boosting your credit score. This is because the things that get directly factored into your account only can be viewed as positively or neutrally.
Experian Boost does not hold your payment history against you, but also makes it clear you won’t receive the benefits for NOT having a good history.
More on how this works, Experian essentially only grants you this ability to use the Experian Boost through their official online website. Once you, as a consumer, then verify your account, you’ll be asked to link your bank account to Experian.
You can choose any bank account you’d like. Still, ideally, you have an active bank account that you keep a balance above $300 on, no overdraft fees in recent months, and consistently make transactions with, such as utility bills, cell phone payments, etc.
The reason why this gets tied into your bank account is because Experian will start automatically recognizing charges on your bank account for what they are, and start rewarding you for your positive on time, consistent payments. Meaning that you’re going to start getting rewarded for various items you typically weren’t rewarded for in the past
Does Experian Boost Work?
The pilot study initially launched by Experian, the numbers were actually quite impressive across the board. Respectively, two out of every three average scores improved by 10 or more points.
Some consumers (10%) who previously had bad credit history became scorable after using the Experian boost. 75% of consumers that had scores under 680 saw scores improved. 14% of consumers with a score of 579 and below saw an improvement score of 620-679. And lastly, 5 to 15% moved into a better score category overall.
So, with zero downsides as of right now, there is no reason not to use Experian Boost or keep in mind that the service is available should you need it in the future.
As a credit bureau, Experian is already regulated by the Consumer Financial Protection Bureau (CFPB), which also heavily regulates and litigates against predatory lending behavior, assuring you that not only is the privacy of your banking information assured, but it’s also not allowed to be scrutinized or used to negatively impact the FICO grading algorithm.
What this means is information like low account balances for accounts linked by Experian cannot be used to negatively impact your scores, determine your borrowing capacity, or be released on your credit reports.
Additionally, no special privileges or ‘free lunches’ will be awarded if you have tucked away a substantial amount of money in your bank account — the Experian Boost can only gather additional data on your spending habits and payment histories to paint a more accurate picture of your creditworthiness.
How Much Does Experian Boost Cost?
Experian Boost is free. It’s simple to sign up, and there are no charges to connect your bank account. Experian offers free Experian CreditWorks℠ Basic membership that comes with free credit monitoring services and FICO® Scores.
Who Should Use Experian Boost?
Experian Boost would benefit those with very poor credit or no credit history. There is some benefit for those with fair credit. Still, those with good or excellent credit probably won’t get much further benefit from the program.
What’s the Most Effective Way to Strengthen Your Credit?
Various programs are being started in order to give consumers the credit boost they need. For example, a financial initiative that has been in the works for a few years with a pilot launch in 2019 holds a striking resemblance to Experian Boost, and that is the UltraFICO score
Both the Experian Boost and the UltraFICO boost work in almost identical ways, with almost identical factors and actually only affect your Experian credit report directly. There are various other businesses and strategic financial strategies you can deploy in order to build your credit in what is considered a safe but unconventional, or perhaps better stated, as less well-known type of way.
- Want to improve your credit score? Read more here.
Some of these methodologies include being an authorized user on someone else’s credit card, especially when the user has a long credit history of positive behavior with their spending- i.e. no missed payments. For others, there are options available like rent-reporting services.
Some companies will actually allow you to report your rent to the credit bureaus in order to create a larger file of your spending behavior and stable income. Lastly, another common method among the unconventional ways of building credit faster is the credit-builder loan that credit unions typically offer, which is basically a savings account negotiated with a credit union that requires a monthly payment to report the loan to the bureaus until paid off.
What are your opinions on the Experian Boost? Have you heard of this before, or have you considered this or another form of credit boosting? With improved credit scores, you can get approved for better loan terms and interest rates across various financial products.
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