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When you’re starting out, getting a credit score can be maddeningly elusive. Many lenders are reluctant to extend credit unless you already have experience with credit. Credit bureau Experian wants to ease that Catch-22 for credit novices with a free product called Experian Boost.
Key takeaways:
Using Boost lets your streaming, phone and utility payments "count" toward your Experian credit score. Renters can also sign up to have eligible rent payments reported to the credit bureau.
Boost scans your bank transactions for the payments, and reports only positive payment info.
You must give enough personal data for Experian to access your accounts.
The idea is to help thin-file customers — especially those who have less experience with credit — by incorporating signs of responsible financial behavior that traditionally aren’t seen by credit reporting bureaus. Boost also may help people who are rebuilding credit after financial setbacks.
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How does Experian Boost work?
To use Boost, consumers must sign up for a free membership on Experian’s website and grant permission to connect their online bank accounts. Boost then identifies streaming, utility, cell phone and rental payments. Once a consumer verifies the data and confirms they want it added to their Experian credit file, an updated FICO score is delivered in real time.
Information about payments will appear only in their Experian credit report and be used when certain credit scores are calculated from that data.
Boost counts only positive payment history, Experian says, so missed payments will not hurt your score. That’s different from how credit scores usually work, where missed or late payments are recorded in your credit report and can reduce your score.
What is included in Experian Boost?
Eligible payments you can add to your Experian credit file include:
Phone and internet services.
Rent.
Utilities such as water and gas.
Telecom.
Insurance such as home, life and auto.
Video streaming services such as Hulu and Disney+.
Bills must be in your name and may need to meet other criteria to qualify.
In addition to reporting bill payments, Boost users can:
Get a free FICO score and credit report.
Get a free identity scan to check if their personal information is at risk.
Get offers for financial products like credit cards, loans and car insurance.
Decide whether these features make sharing your financial details with Experian worth it.
Does Experian Boost actually build your score?
Boost may or may not help you build credit. When a lender checks your credit, it may pull your credit score or view your credit report from any or all of the three major credit bureaus, Experian, Equifax and TransUnion.
Boost can benefit the most common versions of FICO and VantageScore, Experian says. Lenders would see the effects of Boost only if they view your Experian credit report or pull those most commonly used credit scores using Experian data.
Experian acknowledges that Boost users may not see a bump in their scores. The company says that users who did get a bump received a 13-point FICO 8 gain, on average.
Boost vs. UltraFICO and eCredable Lift
Experian offers another product in conjunction with FICO, also aimed at helping thin-file consumers. The UltraFICO score also requires access to your bank account data to gauge financial behavior. Instead of utility payments, the score factors in how much you have in savings and whether you incur overdrafts in your checking account.
Boost competitor eCredable Lift can pull information from utility accounts. It reports utility tradelines to TransUnion, and it goes back up to 24 months. It requires credentials to connect to utility accounts, and can be useful even if the customer is unbanked or underbanked. It's not free, though. It costs $9.95 a month and affects only TransUnion credit reports.
Other ways to build credit
Boost and UltraFICO influence only your Experian credit report and scores built using that data. You can do other things to strengthen your credit, and the effect of these steps can extend to all three credit bureaus:
Become an authorized user on someone else’s credit card. When someone with an established credit line adds you as an authorized user, you benefit from their good credit habits. Make sure the card reports authorized-user status to the credit bureaus.
Apply for a secured credit card. This starter card is backed by a deposit that also serves as your credit limit. It’s best to put a small, recurring charge on it and set up autopay. The small charge means you’re not using too much of your credit line, which can hurt your score. The automatic payment guards against a late or forgotten payment, which also can damage your score.
Use a credit-builder loan. Credit unions typically offer this type of loan, which builds your credit and savings at the same time. It requires a monthly payment that’s held in a separate savings account until you pay off the loan.
Use a rent-reporting service. Some companies offer to have your rent payments reported to the credit bureaus, allowing you to build your credit file.
Building credit takes time and patience, and it pays to track your progress. NerdWallet offers a free VantageScore 3.0 credit score as well as a free credit report from TransUnion.
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Now, let's dive into the concepts mentioned in this article.
Experian Boost
Experian Boost is a free product offered by the credit bureau Experian. Its purpose is to help individuals with limited credit history or thin credit files to improve their credit scores . Boost allows individuals to include additional payment information in their Experian credit score calculation. This includes streaming, phone, and utility payments, as well as eligible rent payments By incorporating these positive payment behaviors, Experian Boost aims to provide a more comprehensive view of an individual's creditworthiness, especially for those who have less experience with credit or are rebuilding their credit after financial setbacks.
To use Experian Boost, individuals need to sign up for a free membership on Experian's website and grant permission to connect their online bank accounts Boost scans the bank transactions for eligible payments and reports only positive payment information to Experian It's important to note that Boost only counts positive payment history, so missed payments will not hurt an individual's credit score This is different from how traditional credit scores work, where missed or late payments can negatively impact the credit score.
Eligible Payments for Experian Boost
Experian Boost allows individuals to add various types of payments to their Experian credit file. Some of the eligible payments include:
- Phone and internet services
- Rent
- Utilities such as water and gas
- Telecom
- Insurance such as home, life, and auto
- Video streaming services such as Hulu and Disney+ To qualify, the bills must be in the individual's name and may need to meet certain criteria.
Effect on Credit Score
Experian Boost can potentially impact an individual's credit score, but the extent of the impact depends on how lenders access and use credit information. When a lender checks an individual's credit, they may pull the credit score or view the credit report from any or all of the three major credit bureaus: Experian, Equifax, and TransUnion . Boost can benefit the most common versions of FICO and VantageScore, but lenders would see the effects of Boost only if they view the Experian credit report or use credit scores that are calculated using Experian data.
Experian acknowledges that not all Boost users may see a significant increase in their credit scores. However, on average, users who did experience a score increase saw a 13-point gain in their FICO 8 score.
Other Ways to Build Credit
In addition to using Experian Boost, there are other strategies individuals can employ to build their credit:
- Become an authorized user on someone else's credit card: By being added as an authorized user on someone else's credit card, individuals can benefit from the primary cardholder's good credit habits.
- Apply for a secured credit card: A secured credit card is backed by a deposit and can help individuals establish or rebuild their credit. It's important to use the card responsibly and make timely payments.
- Use a credit-builder loan: Credit unions often offer credit-builder loans, which help individuals build credit while simultaneously saving money. These loans require regular monthly payments, which are held in a separate savings account until the loan is paid off.
- Use a rent-reporting service: Some companies offer services that report rent payments to credit bureaus, allowing individuals to build their credit history through their rental payments.
It's worth noting that building credit takes time and patience. It's important to track progress and consider multiple strategies to strengthen credit across all three credit bureaus.
I hope this information helps! If you have any further questions, feel free to ask.
