Experian has launched an initiative that it says will help many consumers instantly raise their credit score. It’s called “Experian Boost,” and the credit bureau says it will significantly influence how consumers get access to credit.
There are several ways consumers can raise their credit scores. First and foremost, they should pay all of their bills on time, but some bills count more than others.
For example, if you own a home and pay a mortgage, the mortgage lender reports your payment history to the credit bureaus. But if you rent your home, it’s likely you don’t get a similar credit from paying your rent on time.
Experian says consumers who sign up for Experian Boost will be asked to grant the platform access to their online bank accounts used to pay their bills. Specifically, Boost will look for timely payments on utility and telephone bills, which are currently not included in most credit score formulas.
Recalculated FICO score
The consumer is then asked to verify the data and confirm they want it included in their Experian credit file. After that, Experian delivers a recalculated FICO score.
"Globally, we are constantly innovating and leveraging technology to find new ways to help consumers gain access to quality credit while promoting fair and responsible lending," said Experian Global CEO Brian Cassin. "We are committed to financial inclusion, and Experian Boost is the latest example of our efforts to increase consumer awareness of credit's impact and value while giving them greater control."
Experian said there is no charge to use the Experian Boost platform. Admittedly, it will help some consumers more than others.
The company says consumers with lower scores -- 580 to 669 -- will see the most potential improvement. Based on an early analysis, the company says two out of three credit scores improved when utility and phone bills were included.
Helps those with little credit history
Furthermore, 10 percent of consumers with “thin” credit files -- meaning they haven’t had much access to credit -- became “scorable” for the first time. Seventy-five percent of consumers with a score below 680 experienced an improvement in their credit score.
The improvement for consumers in this score range could be valuable since the rise in score could potentially give them credit options other than expensive subprime loans. The Credit Builders Alliance estimates that a subprime credit score will cost a consumer an additional $200,000 over their lifetime.
For example, having a 720 FICO score instead of 500 will save you $4,020 on a $10,000, 5-year auto loan – lowering the payment by $67 a month.
Experian has provided this link for consumers who want to sign up for Experian Boost or to get more information.