Experian Boost Could Improve Your Credit
- March 19, 2021
- by Ashley
Between buying a home, finding car insurance, or even job hunting – a good credit score can make all the difference. Building up a solid credit score can take years, though. So, is there any way to quickly improve your credit score? Experian, a credit reporting bureau, offers its free service, Experian Boost, as a possible answer.
What Is Experian Boost?
In 2019, Experian launched a free service called Experian Boost. The program incorporates additional data from your credit history and uses it to improve your FICO score. This can result in an improvement in how credit worthy you are as a borrower (lower interest rates and access to larger loans).
The service uses an Experian generated FICO 8 credit scoring system, which is the latest and most widely used by lenders.
According to Experian, Experian Boost has aided over 3.9 million consumers to improve their FICO Scores by almost 50 million points. 60% of people who signed up saw an improvement in their credit score. On average, those consumers experience a 13-point increase.
The improvement was even more significant if the individual started with a score below 579. 87% of that group saw their scores increase by an average of 22 points.
But how does it work, and will you see an improvement on your own FICO Score?
How Experian Boost Work?
To use Experian Boost, you have to create an account. During the setup process, the service will ask you to create a profile and input personal information. One of these steps will involve linking the bank account you use to pay for utilities, phone bills, and streaming services.
Some people can be uncomfortable with giving third parties their financial information, which is reasonable. Experian Boost does have two measures to help alleviate that anxiety: it uses read-only data from your bank, so it can’t affect funds, and the site uses 256-bit SSL encryption. However, data breaches aren’t impossible, so you have to decide if you’re comfortable with that. Of course, it’s also up to you to make sure you’re keeping your financial information secure as well.
A feature to highlight about Experian Boost is that it only reports positive credit history. So, any late payments and delinquencies aren’t included. You also have the option to manually remove any payments you don’t want to be reported. All they need to start adding to your credit history is three months of payments made in a six-month period.
Who Should Use Experian Boost?
Anyone can sign up for the service but it will be most helpful to those with a thin or low credit history. This includes young people who are looking to build credit. Traditionally a credit score is based on payments towards things like student loans, credit cards, auto loans, or a mortgage. If you need a loan to start building credit, but can't get a loan because you have no credit it is chicken and the egg kind of thing.
However people make other kinds of regular payments, such as cell phone service, utility bills, streaming services, etc. Experian Boost gives you the opportunity to count your regular payments towards your positive credit history.
If you already have a longstanding reputation where you frequently use your credit card and pay it off on-time in full, you may not see much of a difference.
Pros of Experian Boost
As far as affecting your credit score, Experian Boost poses no risk. It can only benefit you since it solely reports positive credit history. That can make a difference to someone with a limited or poor credit history. A person in that situation will probably find Experian Boost’s accessibility one of its best features. No fees and the decision to use utility, phone, and streaming service (such as Netflix) payments make the service open to a wide range of people. So, they offer the opportunity for a better credit score to those who might have been limited in options.
Another great feature Experian Boost offers is its speed. You can check your FICO Score in real-time and see any changes take effect immediately. You can also get score tracking, which will alert you to those changes and help you stay on top of them.
Cons of Experian Boost
Experian Boost is limited in its ability to help. If you already have a well-built credit history, there’s not much it can add or change. Also, there’s no guarantee that an improved FICO 8 Score will help you with loans or other credit bureaus. Most mortgage lenders typically use earlier versions of FICO scoring, so don’t count on it for big financial moves like a home loan.
There is also the matter of online safety and protecting against identify theft.
In 2017, Equifax announced a data breach that ultimately exposed 147 million people’s personal information when online attackers took advantage of a vulnerability in the credit bureau’s code sourcing. So, it wasn’t unprecedented when Experian suffered its own data breach in August 2020. The international credit reporting bureau exposed over 24 million South Africans’ personal contact information. While the leak didn’t include financial information, exposing user personal information can increase chances of becoming a victim of identity theft, among other concerns. Experian handled it relatively quickly, but it shows that trusting a third party with important financial and personal information has its risk. So, you should take that into account when using this and similar services.
As we have written about, a good credit score leads to many financial benefits. Overall, Experian Boost is a promising and free credit enhancing service. It has the potential to improve a significant pool of people’s FICO 8 credit score who are either new to establishing credit or have had some difficulties with it in the past. This is provided you are comfortable with the risk of putting some of your financial and budget data in the hands of yet another 3rd party.