You may have heard about Experian Boost and how it can help people to improve their credit scores. Many people don’t fully understand how it works so today we’ll take the time to provide a simple explanation.
Commonly, consumers with low credit scores will suffer from a lack of credit. This means that they either don’t have enough credit lines or they don’t have a strong diversification of credit. If you combine this issue with even just a couple negative credit items, it is typically enough to tank the credit scores.
Normally, payments such as rent, utilities, cell phone, and other alternative credit such as your Netflix account do not get counted in your credit score because the credit bureaus do not have access to these payment records. Consumers that utilize Experian Boost are asked to provide their banking information so that Experian can obtain access to monthly payment documentation and factor it in to the credit scores. If/when the information gathered by Experian shows an on-time history of payments, it can “boost” a person’s credit scores.
When someone has limited credit history, Experian Boost can be a very effective tool. However, there are a few things to keep in mind:
- Not all lenders and loan programs will allow the use of alternative credit and a lack of credit lines could still result in being denied for a mortgage loan.
- Consumers need to provide significant personal data to Experian. This includes bank statements and possibly more.
- Experian Boost does not remove negative items from your credit report.
- Experian may sell your information to other companies, resulting in an increase of solicitations.
We have seen instances where Experian Boost helps greatly, along with instances where it wasn’t as beneficial as the consumer had hoped it would be.
If you’re wondering if Experian Boost would benefit you, give us a call and let’s take a look at your situation. We’re happy to recommend it if we think there would be a benefit, we just want to make sure that you know what to expect before you hand over personal information to the credit bureau. Being an informed, well-educated consumer is the best way to protect yourself!