Experian Boost claims to be an easy, fast way to boost your credit score -- without the need for additional credit. Sound too good to be true? Wondering if Experian Boost works? And is it even safe?
One of the biggest paradoxes in personal finance is that of building credit. If you have no credit (or worse, bad credit) it's hard to get new credit. But you -- usually -- need credit to build your credit.
Experian Boost aims to tackle the issue by looking at all the things we pay that aren't typically included in a credit score. For instance, no matter how much credit you have -- or don't have -- we all have bills. If you pay those bills on time, Experian Boost could use them to build your credit history.
What is Experian Boost and how does it work?
For years, the credit bureaus have all but ignored folks who don't have credit cards or loans. You could pay your power bill and cellphone service on time every month for decades and still not have good credit. This has a serious impact on your personal finances.
That's now changing. Experian Boost uses your banking history to track all of those utility payments and service bills that have gone unrecognized. That positive bill payment history then gets factored into your Experian credit reports, potentially boosting your credit scores.
And best of all, it's free.
Here's how to use Experian Boost:
- Go to the Experian website to create an account.
- Provide your bank account information and give Experian permission to scan your payment history.
- Verify and confirm the information you want added to your credit report.
Your Experian credit scores will update as soon as you complete your sign-up for Experian Boost. According to the company, the average user received an increase of 13 points to their FICO® Score 8.
Which bills qualify for Experian Boost?
Unfortunately, only select rent payments are included; you need to pay rent online to an eligible property management company for the data to be accessible by Experian. But Experian Boost can find and include a variety of other bills, such as home utilities and communication services:
- Water
- Gas
- Electric
- Cable
- Trash
- Internet
- Landlines
- Cellphones
- Streaming services
Yes, you read that last one right. Several major streaming services work with Experian Boost, including: Netflix, HBO, Hulu, and Disney+.
Most major utility and communication companies are recognized by Experian Boost. However, if a bill isn't recognized, you have options. Boost will take you through a Q&A form to identify the reason the account isn't recognized. If you still believe the account should qualify, you can submit the account information to Experian for internal review.
Positive payment history going back up to two years can be included. However, you'll need to have made at least three payments to the account within the last six months, and at least one payment in the last three months.
Can Experian Boost help your credit?
The short answer is: maybe. The effect Experian Boost has on your credit rating will depend a lot on your existing credit history.
Folks who already have a long credit history and a good credit score probably won't see much -- if any -- impact from Experian Boost. The extra payment history from your bills simply won't matter in the scope of your broader credit history.
On the other hand, if you've never had credit before, or you have limited or bad credit, the benefits could be substantial. For example, you could increase your credit score -- or, even more significantly, qualify for one for the first time.
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 an Experian 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 fill out your credit file and improve your credit scores.
Only works with your Experian credit reports and scores
One thing to note is that Experian Boost only works with your Experian credit report and scores. 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 or scores.
Learn more: The three credit bureaus
It's hard to predict which credit bureau a lender will query. If a lender pulls 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.
Learn more: Complete guide to your FICO Score®
Is Experian Boost safe to use?
Whether Experian Boost will actually help your credit may vary. Even if it doesn't help you, however, Experian Boost will not hurt your credit score.
For one thing, Experian Boost looks at your banking data, not your credit history. This means there is no credit inquiry.
Related: Why applying for a credit card hurts your credit score
More importantly, Experian Boost only includes on-time payments, which add positive payment history. So, that bill you paid a few days (or weeks) late last year won't be included.
(That's not to say that paying your bills late won't hurt your credit score at all. If you fall behind by more than 60 days, your provider can report your account as delinquent to the credit bureaus. But that's a separate issue; Experian Boost doesn't add any negative data.)
Who should use Experian Boost?
Experian Boost is best for people with no, limited, or troubled credit history:
- If you have no credit history: Adding a strong history of on-time bill payments could give you enough credit history to qualify for an Experian credit score.
- If you have limited credit history: Adding extra on-time payments could pad your history and increase your Experian credit score.
- If you have a troubled credit history: Adding positive payment history with on-time bill payments could help offset mistakes from your credit past, increasing your Experian credit score.
According to Experian, Boost improved the scores of 75% of people with a FICO® Score below 680. And the average user saw an increase of 13 points to their FICO® Score 8.
However, as credit scores increase, the benefits of Experian Boost decrease. People who already have a good credit score will likely see little to no benefit.
Other ways to build credit
No matter how well Experian Boost works for you, it isn't a complete solution for building credit or credit repair. Even with this tool, you're not going to go from having no credit score to having an excellent credit score just from 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 your credit utilization low (how much credit you're using versus how much you have available).
You need credit to build credit, though. If you're struggling to get started, there are a few methods you can use.
Open a secured credit card
Having no credit (or bad credit) can make it hard to get a regular, unsecured credit card. Secured credit cards are much easier to get because they require a refundable cash security deposit. (This protects the credit card issuer if you can't repay your balance.)
Learn more: The best secured credit cards
Other than the deposit, secured credit cards operate the same way as unsecured cards. You can use them to make purchases, including online purchases. Then, you'll receive a bill each month. If you pay your credit card bill in full and on time every month, you'll build up 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 returned in full.
Get a credit-builder loan
Credit-builder loans are specifically designed for people who need to establish credit or rebuild bad credit. Unlike a regular personal loan, a credit-builder loan doesn't give you money upfront. Instead, when you take out a credit-building loan, the money goes into a locked savings account.
Then, you'll make monthly loan payments (including interest) for the length of the loan term. As long as you pay the loan in full, you'll get 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 every month. If you make your payments on time, you'll build credit and improve your credit scores.
Become an authorized user
Every credit card has a primary cardholder; that's the person who opened the account. However, many credit cards also allow authorized users. If you need to build credit fast, this may be the best option.
Authorized users are sort of like invited guests, but for credit cards. The users get a card with their name on it, linked to the account. You can make purchases as if the account is your own -- but it isn't. You're not the owner of the account, and you're not financially responsible for it. You also can't close the account, change any account info, or take any other action.
Although authorized users aren't responsible for the account, it does impact them. That's because most issuers report the account to the credit bureaus for both the owner and any authorized users. If the account is old and in good standing, that can help the authorized user by adding to their credit history.
The other side of the coin is that the authorized user could cause problems for the account owner. If the user overspends, the primary cardholder is the one who pays -- literally. The account owner is the one who is legally and financially responsible for paying the debt.
Certainly! Experian Boost is a tool designed to enhance credit scores by incorporating bill payment history not traditionally included in credit reports. It addresses the challenge many face: being unable to build credit without credit itself. It leverages overlooked bill payments, such as utilities and services, to create a more comprehensive credit profile.
What is Experian Boost?
Experian Boost, a free service, utilizes banking data to recognize and include utility payments and service bills within your credit report. By integrating positive bill payment history, it potentially elevates credit scores, aiming to alleviate the struggle for those without extensive credit histories.
How to Use Experian Boost:
- Visit the Experian website and create an account.
- Provide bank account details for payment history scanning.
- Verify and confirm the information to be added to your credit report.
- Upon completion, your Experian credit scores update immediately. On average, users saw a 13-point increase in their FICO® Score 8.
Bills Eligible for Experian Boost:
Several utility and communication bills qualify, including water, gas, electric, cable, internet, landlines, cellphones, and even streaming services like Netflix, HBO, Hulu, and Disney+. While select rent payments are included, they need to be paid online to eligible property management companies for Experian's access.
How Experian Boost Affects Credit:
The impact of Experian Boost on credit ratings varies based on existing credit history. For those with limited or bad credit, or none at all, the benefits can be significant. It can fill gaps in credit history, potentially leading to qualification for an Experian credit score.
Who Benefits from Experian Boost:
- Individuals with no or limited credit history can qualify for an Experian credit score.
- Those with troubled credit histories can offset past mistakes with positive payment history.
- Users with FICO® Scores below 680 experienced improvements; the average boost was 13 points.
Limitations and Considerations:
- Experian Boost solely impacts Experian credit reports and scores, not those from TransUnion or Equifax.
- While Boost applies to various credit scoring models using Experian data, it might not influence lenders querying TransUnion or Equifax reports.
Is Experian Boost Safe?
Experian Boost doesn’t perform a credit inquiry; it assesses banking data for on-time payments only, ensuring no negative data is added. However, late payments over 60 days may impact credit independently of Boost.
Alternative Credit-Building Methods:
- Secured credit cards: Easier to obtain than unsecured cards, they require a refundable deposit, aiding in establishing positive credit.
- Credit-builder loans: These help establish credit by reporting monthly payments to the credit bureaus.
- Authorized user status: Being added to someone else's credit card can positively impact your credit if the account is in good standing.
Experian Boost isn’t a complete solution for credit building, emphasizing the importance of using credit responsibly over time. It's a tool to supplement credit strategies, particularly beneficial for those seeking to establish or improve credit without traditional credit sources.
This information encompasses the concepts within the article about Experian Boost, highlighting its functions, impact on credit, safety considerations, and alternative methods for credit building.
