Is an insufficient credit history or low credit score preventing you from qualifying for a loan or a decent interest rate?
If you use the traditional tactics, it may take you several months of responsible financial behavior to raise your credit score to a favorable level.
Thanks to Experian, one of the three leading credit reporting agencies in the U.S., you don’t have to take that arduous route.
The tool, known as Experian Boost. could raise the credit scores of millions of consumers, especially those that don’t have a significant borrowing history.
It allows users to grant permission to the credit reporting agency to connect their bank accounts and gain access to their telecommunication and utility payments in a bid to update their FICO score in real time.
How Experian Boost Works
In addition to offering free credit reports, Experian wants to help people improve their scores. Here’s a quick breakdown of how Boost can help you.
The Basics of Experian Boost
To begin with, you won’t pay a dime to use Experian Boost. It’s a free tool geared to help individuals struggling with building credit.
If you are looking to boost your credit using the tool, you will have to allow it to scan your bank account transactions to identify mobile phone and utility payments. The information extracted by the tool will be reflected in your Experian credit report and be utilized when calculating various credit scores.
It is worth noting that Experian Boost is only interested in positive payment history. It doesn’t consider defaulted payments.
So, you don’t have to worry about missed cell phone or utility payments hurting your credit score. Once Experian Boost has identified utility and telecommunication payments, you will need to verify the data and confirm that you want it added to your Experian credit file.
Afterward, you will receive an updated credit FICO Score in real time. The entire process takes about five minutes, boosting your credit score almost immediately.
Which Credit Scores Experian Boost Impacts
This tool works with the major credit scores that lenders use, namely:
- FICO 8
- FICO 9
- VantageScore 3
- VantageScore 4
However, if a lender uses credit reports from Transunion or Equifax to determine your eligibility for a loan or credit facility, Experian Boost won’t be of any help.
Also worthy of note is that Experian works with Finicity, a third-party firm that facilitates the transfer of data from consumers’ bank accounts to Experian’s credit report repository. You can get access to the tool by registering on Experian’s website.
How Effective is Experian Boost?
Experian Boost by the Numbers
Experian conducted a study to determine the effectiveness of Boost. Here were the findings:
- Two out of three: average scores improved
- 10%: number of consumers who previously had insufficient credit history became scoreable after using Experian Boost.
- 75%: percentage of consumers with FICO Scores below 680 who had their credit scores improved with Experian Boost
- 14%: percentage of consumers with a credit score of 579 and below who saw an improvement in their credit score to between 620 and 679.
- 5 to 15%: percentage who, depending on the credit level, moved into a better score category.
Experian Boost Results
These study findings serve to show that Experian Boost can boost your credit score, especially if you have a thin credit history. However, results may vary from one user to another.
While Boost calculates your score based on the FICO 8 model, a lender may use a different type of score to determine your eligibility for a credit facility.
Nonetheless, boosting that score could eliminate huge barriers for those looking to enhance their financial health. This tool is not only beneficial for consumers. It also helps lenders make more informed lending decisions after seeing consumers’ payment histories.
Can You Benefit from Experian Boost?
Who Should Use Boost
According to Experian, Experian Boost would be ideal if you have less than five trade lines and with a credit score between 580 and 669.
However, any credit-active consumer can benefit from the score-boosting tool. In fact, at least 66 percent of consumers will see an improvement in their credit score after using Experian Boost.
Here are a few particular groups who should consider Experian Boost:
- Consumers with incomplete or subprime credit scores: These individuals can boost their score when applying for loans and lines of credit.
- Young adults: Those looking for credit/loans without much to show in terms of credit history, you will find Experian Boost exceptionally valuable.
- Responsible consumers: Those whose good financial habits aren’t reflected in their current credit report could be able to qualify for various credit and loan products.
How to Benefit from Experian Boost
To benefit from Experian Boost, you need to have an online bank account. You also need to allow Experian to scan it electronically. Experian will partner with a financial technology company, Finicity, to check bank statements for qualifying payments.
You should not worry about the security of your information. The system won’t alter your personal data as it uses read-only access. Also, keep in mind that you can revoke the permission granted to Experian at any time.
That means you are in total control and you can only grant access to your accounts only when you need to use Experian Boost.
Alternative to Experian Boost
Another easy way to boost your credit score is through UltraFICO, which is also geared to help thin-file consumers.
How UltraFICO Works
By evaluating cash balances, UltraFICO is poised to help many consumers who otherwise don’t have, or are struggling to build, up credit. It is aimed at giving those who have no credit or insufficient credit the opportunity to build it by demonstrating they can manage their cash accounts.
Like Experian Boost, this platform also needs access to your bank account data to analyze your financial behavior.
UltraFICO doesn’t look at your telecom and utility payments. It looks at your savings balance and whether your checking account has overdrafts.
It is worth noting that this platform is being rolled on a smaller-scale pilot program first before it is fully launched in mid-2019. That means it could take a number of years for UltraFICO to be widely adopted by lenders.
Your credit score can have a significant impact on your financial health. It will determine whether you are eligible for a loan or credit product and the interest rate you will pay. With a low credit score, you may not be approved for a loan or credit product.
Experian Boost, developed by the credit reporting agency Experian, can help improve your score, particularly if you have not taken out substantial loans or had credit cards in your own name.
You will have to grant Experian permission to connect to your bank accounts and gain access to your telecom and utility payments. Then you can verify the data and confirm that you want it to be added to your Experian credit file. Afterward, you will receive an updated credit score in real time.
With an improved credit score, you will have a higher chance of getting approved for a credit card or loan and save some bucks, thanks to lower interest rates.
If you’re looking for more ways to boost your credit score quickly, check out this helpful guide to get started.