Experian Boost 101

Borrowing, Credit Rating

Experian Boost? Is that a new energy drink?

No, it’s not designed to boost your energy – Experian Boost is designed to boost your credit score. This new program from the credit reporting agency Experian was launched in March 2019. In its first six months of activity, Experian Boost has instantly increased a total of more than 11 million credit score points. Two out of three users saw rises in their scores, with an average instant increase of over 10 points. How can Experian Boost make such an impact on your credit score?

Normally, it takes months of diligence to improve a credit score. First, you show fiscal responsibility through making on-time payments, keeping card balances low compared to your credit limit, and not opening excessive new accounts. Your credit score will slowly increase as a result.

Your credit score is compiled from information in your credit report – a summary of all your credit and borrowing-related activities. However, you can show fiscal responsibility in ways that involve financial commitments but not borrowing – such as making scheduled cellphone, utility, and cable TV payments on time.

Experian Boost allows these non-borrowing factors to be considered in calculating your credit score. For borrowers who have poor credit or limited credit activity, Experian Boost could be the difference between credit rejection and approval. On average, 13% of users moved up a credit tier, with 24% of those in the “Poor” category (a FICO score of 600 or less) moving up to the “Fair” tier (scores of 601-660).

Ninety percent of consumers with “thin” credit files containing little borrowing information saw an instant increase with Experian Boost. Their credit scores increased by an average of 19 points. Nationwide, California had the highest number of consumers who boosted their scores and the most total points boosted, followed by Texas and Florida.

Benefits aren’t limited to those with poor credit. Experian’s Chief Marketing Officer Jeff Softley tried the product on his own account and increased his score by 28 points through increasing the total number of accounts reported.

How does Experian get this non-reported payment information? They evaluate payments through access to your online bank accounts, which you’ll provide at signup.

Experian is partnering with the financial technology firm Finicity to review your bank statements for all eligible payments. Access is read-only, so the information can’t be altered – but there’s always the risk of a data breach that exposes your information. Let MoneyTips protect your credit and your identity with a free trial.

Once any eligible payments are identified, you confirm that the payments are correct, and they are added to your file. A new credit score is immediately calculated.

The Experian Boost program works with the FICO 8 and FICO 9 credit scoring systems as well as VantageScore 3 and VantageScore 4 – covering most of the scoring systems that lenders use.

However, if lenders use credit reports from TransUnion or Equifax instead of Experian to evaluate applications, Experian Boost won’t help. When shopping around for lenders and loan rates, ask which credit reporting agency the lenders use in their evaluation.

Other benefits of Experian Boost include free credit score tracking, customized alerts for any changes in your score, and a review of the specific factors that are affecting your credit score.

Experian Boost isn’t guaranteed to raise your score – it simply allows other sources of information to be used to determine your creditworthiness. If that information doesn’t give a positive impression, you won’t see a credit score increase. Before signing up for Experian Boost, review your account history and make sure it will help your creditworthiness instead of hurting it.

In addition, remember that you can easily neutralize a credit score boost with missed payments, excessive credit applications, high balances that approach your card limits, or other activities that lower your score. Don’t waste your increased credit score before you have a chance to put it to use.

If your credit score needs a boost, the Experian Boost may be the answer. Just make sure that you’re comfortable with Experian accessing your bank accounts to calculate the boost – and that your payment records show responsible behavior to back it up.

You can check your credit score and read your credit report for free within minutes by joining MoneyTips.

Photo ©iStockphoto.com/svetikd

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