Experian recently announced a new program that will help consumers who don’t have any credit scores. The program is called Experian Boost. Until now utility bills and phone bills payments were not counted into the scoring models. This was effecting a lot of consumers who do not have any credit cards or other trade lines. With the new Experian boost that will change.
How Does Experian Boost Work?
Consumers will be able to voluntarily provide Experian with access to their bank accounts. Experian will scan the bank accounts for information regarding on-time payments for cell phone and utility bills. (I don’t know how they will know if the bill was paid on time or if it was a late payment.) The information will be added to your Experian credit report. Experian claims that only positive information will be added, meaning only the on-time payments will be added and not any late payments. (Adding unverifiable negative information from a bank account I believe would be a violation of the FCRA.)
Once the information is added, then scoring models will be able to use this information to calculate a credit score. The only scoring models, as of now, which will include such information are the Fico 08, Fico 09, Vantage 03, and Vantage 04.
Will It Really Help?
Experian is only one of the three credit bureaus. Experian boost will only provide a credit score for loans using the Experian credit report only. Also, it will only be used when the Fico 08 credit scoring model is used. There are many credit card issuers which only pull an Experian credit report and use the Fico 08 scoring model. (Check here for information on which issuers pull which credit report). But unfortunately, when it comes to mortgage applications or any other significant loan, most of the time, credit issuers will want to pull all three credit reports. Therefore, Experian boost will not help much in these situations.
When Will It Be Available?
It will be released somewhere at the beginning of 2019.
Experian Boost may be beneficial for some. I still would recommend a consumer try his best by rather trying to build traditional credit. You can read an easy 4 step guide to build credit here.
That’s it for now, Have a great day!