Your Credit Score Boost

You may have seen the ads, “Boost your FICO® credit score with Experian. Only Experian can raise your FICO® Score instantly.” FICO® is the most widely used credit score in lending and is the score you want to know if you are getting ready to borrow money for a home, a car or even to open a credit card. So how does Experian Boost work and does it work?

The premise

The idea behind the Experian Boost™ is to increase your credit score by adding bills, such as utilities and cell phones, to your credit history. To do this, visit the Experian website, create an account and then connect the checking account that you use to pay bills. This should be the account that has the most history of your payments to cable, utility, cell phone, memberships and other accounts.

Once you select the utility and phone accounts you want to add to your credit report, viola; your score increases.

The reality

Just like there are three major credit reporting agencies (Equifax, Experian and TransUnion), we also have multiple credit scores. FICO®, Vantage® and Beacon® Scores are just a few.

Within those name brands, there are also different versions of scores. FICO® offers many scores including FICO® 8 and FICO® 9. They also have different values for industries such as auto lending versus mortgage lending.

Every lender uses a credit report and score that they have decided works best for their business needs. If they do not use the Experian Boost FICO® credit score, the accounts you added will not be included in that score.

Scores also vary based on the credit report they are being placed against. Your FICO® score on your Experian Boost™ report will be different than a FICO® score based on a general Experian report.

So, the boosted score you are creating will only benefit you IF your lender uses that report and that score. Most do not.

Are there downsides to Boosting a Score?

Even though boosting your score through a service may not help you qualify for loans or credit now, it could in the future. As lenders look for more ways to qualify people for borrowing, this type of payment history may become more accepted in the credit world.

It does not hurt to add those payments to your report. According to Experian, even if you pay late on a utility or phone account, it will not negatively impact your score.

Using Alternative Payment History

We suggest that people who have no credit, or very little information in their credit reports, create an alternative credit report. This involves collecting payments for things like rent or utilities, cell phone payments, gym memberships and other accounts that usually do not report to credit reporting agencies. Try to show a history of these payments of 24 months or longer.

This alternative history may be helpful in demonstrating to a landlord or other business, that you do know how to manage payments and bills. Again, there is no guarantee the business will accept an alternative report, but it is worth having the information available. Experian Boost™ may help with that by providing a way to gather that information and keep it up to date in one location – your Experian Credit Report.

American Financial Solutions is here to help you with your credit, debt and budgeting questions. If you need help choosing a plan for getting out of debt or have a question about the best way to build credit, call us today. 888-282-5811 or visit us online www.americanfinancialsolutions.org.