What Is Experian Boost and How Does It Work?
Your friends just got this buzzy new credit card and youâ€™re excited to apply. But the card issuerâ€™s website says that you need â€śgood to excellent credit,â€ť and you know your credit score is just below the cutoff for â€śgood.â€ť
Your credit scores can be a limiting factor when you want to get approved for a new credit card or car loan with an affordable interest rate (or at all), especially if youâ€™re new to building credit and donâ€™t have a lot of credit history to show.
Historically, utility bills havenâ€™t helped people demonstrate a positive payment history or improve their scores. But Experian Boost, a free service launched in early 2019 that connects utility billsâ€”paid from your checking or savings accountâ€”directly to your credit report, may give you credit (sorry, pun intended) for those payments. If you have a limited credit history and a fair or poor credit score, you could get a few extra points for paying your utility bills on time.
How does Experian Boost work?
When you give Experian Boost permission to access your bank accounts, Experian scans them to identify utility or telecom bills, such as gas, water, electricity, cable, and cell phone plans. If it detects a positive payment history going back at least three monthsâ€”and you confirm you want to add the information to your credit reportâ€”you could see an increase in certain FICO and VantageScore credit scores that are calculated using Experian data.
According to Rod Griffin, Experianâ€™s director of public education, Experian Boost adds to your credit report any bill it detects as an account, or tradeline. The reason the service considers only positive payment histories is because negative marksâ€”delinquent bills, for exampleâ€”will likely make their way to your credit report regardless, whether through collections or directly from your utility provider.
If you do miss payments on a utility bill, or if Experian Boost can no longer capture your payment history for three months or more, the account is removed from your report and wonâ€™t be factored into your credit score.
Because Experian continues monitoring your connected bank accounts each month, you also have the chance to lengthen your positive payment history, so your score could continue to improve over time. If you decide you no longer want to use Experian Boost, you can disconnect your bank accounts. This removes your entire payment history for those bills from your report, which means your credit scores could drop.
What you need to use Experian Boost
To use Experian Boost, you must create an account with Experian. You have to provide some basic information, as well as connect any of the bank accounts you use to pay your utility bills. Experian then scans those accounts and ask you to verify the payment histories you want to add to your credit file.
Beyond that, there are a few additional boxes to check:
- Your bills must be paid with a checking or savings account. Experian Boost can capture transactions from demand deposit accounts only. Utilities paid with a credit card wonâ€™t count toward a potential score increase.
- You must have at least three monthsâ€™ worth of payment history. Experian Boost picks up payment patterns of three months or longer.
- Transactions must include the names of individual utility providers. If your utility payments are combined (water and trash on a single municipal bill, for example), Experian Boost wonâ€™t recognize them. It also wonâ€™t give you credit for Venmo-ing your roommates, or any other payments not made directly to a provider.
- You must have at least one account, like a credit card or loan, on your credit report. Experian Boost has to connect to an existing credit file (including personal information and data reported by lenders) that confirms your identity. You canâ€™t use Experian Boost to establish credit.
After youâ€™ve signed up and connected your bank accounts, Experian Boost shows you immediately whether your verified bill payments improve your score. You can also view your utility accounts on your Experian credit report.
Does Experian Boost work?
The short answer: Experian Boost works for some people. According to Griffin, about two out of three users see their FICO 8 scores increase (around 10 points on average). People who have fewer than five accounts on their credit reports may see a larger jump (closer to 19 points on average).
Youâ€™re most likely to benefit from Experian Boost when you have a credit score below 680 (anything below 670 is considered fair or poor) and fewer than five tradelines (or accounts) on your credit report.
About two out of three users see their FICO 8 scores increase (around 10 points on average).
â€ś[Experian Boost] can make a big difference for people who do have a thin file and want to establish a positive credit history and improve their credit score, to the point where borrowing is much more affordable and financial services are much more accessible,â€ť said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling.
Of course, having at least three monthsâ€™ worth of on-time bill payments doesnâ€™t guarantee that your score will improve that much (or at all), even if your credit file is thin or your starting point is fair or poor. And if you have a longer credit historyâ€”positive or negativeâ€”or a higher score, a few utility payments are unlikely to move the needle.
Even if you do see a bump in your score, that doesnâ€™t mean youâ€™ll get approved for more (or cheaper) credit.
When we tried the service, Experian identified two recurring utility charges: 12 months of electricity payments and three months of cell phone payments. There was no change to our initial Experian credit score of 691.
Even if you do see a bump in your score, that doesnâ€™t mean youâ€™ll get approved for more (or cheaper) credit. For example, if your bank or lender uses an older FICO score or pulls your credit report from TransUnion or Equifax, any advantage you get from Experian Boost wonâ€™t be factored into lending decisions.
That said, your utility bills may play a bigger role in credit decisions down the line. Both Equifax and TransUnion have partnerships in place that let them share alternative credit data, such as utility payment history and deposit account transactions, with lenders.
Should you use Experian Boost?
Since Experian Boost is a free service, you wonâ€™t lose any money simply by trying it out. Itâ€™s also an alternative to credit-repair companies (PDF) that charge fees but sometimes fail to deliver results, said McClary.
One risk to using Experian Boost: You have to grant Experian access to your bank accounts. The connection is read-only and encrypted, but if youâ€™re cautious about privacy (especially given the spate of data breaches in recent years, like the one Equifax announced in September 2017), this may be a dealbreaker.
What to do if your credit score doesnâ€™t improve
If your credit score doesnâ€™t increase when you first connect your bank accounts to Experian Boost, donâ€™t panic. You may still see improvements down the line, as the tool continues to monitor your deposit accounts for bill payments (Experian Boost factors up to 24 months of payment history into your score).
To maximize your chances of seeing an increase to your score, make sure you meet all the requirements weâ€™ve discussed and that you connect every bank account you use to pay utility and telecom bills to Experian Boost. If you have a roommate or partner who handles the bills, negotiate to have one or more utilities transferred to your name so you can get credit for on-time payments. And check your Experian Boost account frequently to make sure the tool accurately captures your payment history.
Finally, remember that Experian Boost isnâ€™t the end-all-be-all for raising your credit score. It may work for some users who are looking for a quick increase, but it wonâ€™t help everyoneâ€”and it may not give you a jump significant enough to affect your borrowing power. Though it doesnâ€™t hurt to see what Experian Boost can do for your score, you shouldnâ€™t rely on it without taking other steps to build or rebuild your credit.