This free service can help you improve your credit score.
- The most common bills that count toward your credit score are credit cards, car loans, student loans, and home loans.
- Experian Boost is a free service that gives you credit to pay for utility bills, cell phone bills, and even streaming services like Netflix.
- Those with limited credit history, as well as those with low to fair credit scores, tend to see the most benefit from the service.
Your credit score is one of the most important financial numbers in your life. Financial institutions use it to determine if you qualify for a loan or credit card, as well as your interest rate. Your score can also determine how much you pay in insurance premiums, and many employers and homeowners check your credit as part of the screening process.
With so much at stake, it’s important to consistently maintain a good credit score. There are three different major credit reporting agencies, Experian®, TransUnion®, and Equifax®, that keep track of your credit history. This is also known as your credit report. Your FICO Score (Fair Isaac Corporation) is based on information from your credit report and consists of the following:
- 35% On-time bill payment record
- 30% Amount due
- 15% Credit History
- 10% credit mix
- 10% Recent Credit Inquiries
To get a FICO score, you’ll need six months of credit history to assess your creditworthiness. The most common bills that count toward your credit score are credit cards, car loans, student loans, and mortgages. Your cell phone, utility, and other monthly payments you make generally don’t affect your credit score. So if you have limited credit history or no loans or credit cards, how can you improve your score?
Get credit for regular monthly bills
Experian, one of the three credit bureaus, recently launched a program called Experian Boost. It can give you credit to make payments on your phone bills, utilities, and certain streaming services. The service is free, and to get started, you connect the bank account you use to pay your bills to Experian Boost. If you already have an account with Experian, you can add this service under Reports & Scores.
Experian then searches your bank transactions to find qualifying payments in time to add them to your Experian credit file. Popular bills that work with Experian Boost are Netflix, Disney Plus, Hulu, HBO, AT&T, Spectrum, and Verizon. You must make payments using your bank account. Invoices need at least three months of payments within a six-month period to qualify for Experian Boost. The service does not count payments made by credit card.
By adding payment history for these types of invoices, you can create a positive payment history. Since payment history is the most important factor in determining your credit score, these records can help you improve your credit instantly. Experian Boost only uses on-time payment histories on these accounts, so late payments won’t lower your credit score. Another factor that determines your credit score is the length of your credit history. These additional accounts can improve your score by showing more proof of active accounts and positive payment history. So far, more than 4 million Americans have used this service.
Who should use this service?
If you have little or no credit history or have an established history and are looking to boost your credit score, then this service can be helpful. Anyone can sign up for this service, but those with limited credit history, as well as those with low to fair credit scores, tend to see the most benefit. According to Experian, 87% of people with very low scores saw an increase and 63% of people with a fair score saw an increase. But not everyone will see an improved score.
According to Experian, the average user who received a boost improved their credit score by 13 points. One important thing to keep in mind is that your credit score is calculated based on the FICO Score 8 model. But financial institutions use many different credit scoring models. Since lenders and insurers you deal with may use a different FICO Score than FICO Score 8, Experian Boost may or may not benefit you.
Since this is a free service, if you’re paying a utility, telecom, or Netflix bill with your bank account, Experian Boost may be worth considering. While it may not increase your score for all financial institutions, many use this FICO score since Experian is one of the top three credit bureaus. Those enrolled in the program also get a free Experian CreditWorks Basic membership, which offers services like credit monitoring and a free FICO Score. It’s important to stay on top of your score and look for ways to improve it. Experian Boost can help, but you still need to continue to make payments on time and take into account the other factors that make up your credit score.
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