Having a higher credit score opens the door to better financing opportunities.
If you have a thin credit file or bad credit, you're probably looking for ways to improve it.
For that reason, you might have looked into Experian Boost -- a program that aims to look at other factors to boost your credit score.
Does it really work?
In some cases, yes.
Read on to learn how Experian Boost can help your credit score—almost immediately.
What is Experian Boost?
To be clear:
Signing up for Experian Boost doesn’t involve signing up for credit repair services.
If you have a thin credit history or a low credit score, you’ve likely seen ads from companies offering to improve your score. For a fee, of course.
So when you hear about any service to improve credit, it’s natural to be a little cautious.
Where the "boost" comes from
Experian Boost isn’t a credit report, nor is it a gimmick. The credit bureau Experian offers this service.
The potential boost in your credit score comes fromyour monthly on-time cell phone payments and utility payments.
These timely monthly payments will appear on your Experian credit report. Thus, improving and strengthening your credit file.
If you don’t know much about credit, cell phone and utility payments aren’t normally included on credit reports.
Therefore, they don’t normally benefit credit scores.
Credit scores typically increase by getting a loan, a credit card, and other financing. And then making timely monthly payments to these creditors or lenders.
The reality is:
If you can’t get a loan or a credit card, or if you have four or less credit accounts (a thin history), it can be difficult to build up your credit score. This is where Experian Boost comes in.
The ability to get credit for utility payments and cell phone payments not only adds more accounts to your credit report. It also adds more positive activity.
Receiving this credit can be the trick to getting over the hump and adding more points to your credit score. With more points, it’ll be easier to qualify for financing with better interest rates.
How Much of a Credit Boost to Expect
Experian Boost has helped more than 1 million Americans increase their credit score.
According to one study, about “61 percent of Experian Boost users have increased their FICO credit scores by an average of 13 points per user.”
The survey also found that “64 percent of users went from having a very poor score to a fair score.” And among users with a thin credit file, “about 86 percent saw an increase in their scores.”
What Goes Into a Credit Score
Adding on-time bill payments can be very beneficial to your overall credit profile.
Payment history makes up a big chunk of your credit score. But it isn’t the only factor.
The five factors that influence credit scoring includes:
- Payment history (35 percent of your credit score). The more on-time payments that appear on your credit report, the better your credit score. Keep in mind, though, you’re also penalized for past due payments. One benefit of using Experian Boost is that it only searches your bank account for “on-time payments.” So if you’ve missed a few utility payments or cell phone payments, these late payments will not hurt your score.
- Amount owed (30 percent of your credit score). Although you need credit to build credit, it’s important to keep your debt low. Especially revolving debt (credit cards). This debt impacts your credit score differently than installment loans.
- Length of credit history (15 percent of your credit score). Credit scores improve over time. So a person with 20 years of responsible credit history will have a higher score than someone with only five years of responsible credit history.
- Credit mix (10 percent of your credit score). Building a strong, healthy score often requires diversifying your accounts. This includes having a mix of credit cards, mortgage loans, car loans, and other installment loans
- New credit (10 percent of your credit score). Opening too many credit accounts in a short span of time can hurt your credit score. Each new application reduces your credit score by a few points.
Truly Free
The important thing to know:
Experian Boost is that it’s completely free to sign up.
There aren’t any one-time setup fees or monthly fees.
Fees are typical when working with credit repair companies.
To get started, you’ll need to visit the Experian Boost page and create a free Experian account.
Once you’ve set up your account, you’ll link this account to your bank account. Experian will then scan your bank account to look for qualifying on-time payments.
These include payments you’ve made to your cell phone company, as well as your utility companies.
Once Experian completes the scan or search, the next step is to verify which payments to include on your Experian credit file.
Once you’ve included these payments, Experian re-calculates your credit score based on the addition of these accounts.
When It Doesn’t Really Help?
But although Experian Boost can increase your credit score, the service doesn’t help everyone
Remember:
This service is only offered through Experian.
So, on-time utility and cell phone payments will only appear on your Experian credit report.
The inclusion of these payments on your credit file is only beneficial when future creditors pull your Experian credit report. Or, when they pull your score from credit scoring models that recognize Experian data—FICO (FICO 8 and 9) and VantageScore (3.0 and 4.0).
There are three major credit bureaus, the other two being Equifax and TransUnion.
Some creditors and lenders pull all three credit reports when reviewing credit applications. But others only pull one report.
So if you improve your Experian credit file, yet a lender reviews your TransUnion credit file, Experian Boost isn’t going to help.
Be mindful that Boost scans your bank account (either your checking or savings account) to look for qualifying on-time payment.
So the service also doesn’t help if you make your cell phone payments or utility payments with a credit card.
Other Ways to Improve Your Credit Score
Of course:
Experian Boost isn’t the only way to build or improve your credit score.
Along with adding qualifying on-time payments to your Experian credit report, you should take other steps as well.
This way, you’re able to improve your Equifax and TransUnion credit reports, too.
Pay your bills on time
Past due accounts, collection accounts, and other delinquencies can reduce your credit score.
Get into a habit of paying all your bills on or before their due dates.
Set up payment reminders or automate payments to avoid late arrivals.
Pay down credit card debt
Keep your credit card balances below 30 percent of your credit line.
If you have a credit card with a $1,000 credit limit, your balance should never exceed $300.
Avoid debt by charging only what you can afford, and paying off balances in full every month.
Don’t apply for too much credit
Remember, applying for too much credit in a short period of time increases your credit risk.
Also, every credit application reduces your credit score by a few points.
If you apply for 10 credit cards within a month, you could potentially reduce your credit score by 20 to 30 points.
Therefore, only apply for new credit when necessary, and spread out applications.
Become an authorized user on a credit card
Becoming an authorized user on someone’s credit card can also boost your credit score.
You’ll benefit from their on-time payment history, as well as their account history.
You’re not the primary account holder, though. So only become an authorized user if you trust this person to be responsible with their credit account.
Get a secured credit card
If you have a thin credit file or if you’re looking to rebuild your credit history, you can also get a secured credit card.
You’ll give the issuing bank a security deposit with your application.
In exchange, you’ll get a credit card with a credit line that’s equivalent to your deposit.
If you use the account responsibly, the bank may eventually refund your deposit and convert your secured credit card to an unsecured account.
Final Word
Experian Boost has helped more than 1 million Americans, and it can help you too.
Getting credit for your utility payments and cell phone payments can add points to your credit score almost instantly.
Just know:
You’ll benefit only from this boost when a lender pulls your Experian credit report or credit scores using Experian data.
So while this is an excellent program, make sure you take other steps to improve your entire credit file.
