This month saw the launch of a new tool called Experian Boost, designed to help you instantly increase your credit score. We explore how it works and how it could help you get approved for finance.
What is Experian Boost and how does it work?
Traditionally, payments towards entertainment subscriptions, council tax and savings haven’t contributed to your credit score, and they don’t appear on your credit report. This is because they’re not classed as forms of borrowing. Take Netflix and Spotify subscriptions for example - you can usually pay for them on a pay-as-you-go basis, instead of entering into a credit agreement.
One survey carried out by Kantar found that 56% of UK households had a least one subscription video on demand during lockdown (with the likes of Netflix and Amazon). While millions of Brits make these kinds of payments on time every month, their credit scores are not seeing the benefit.
So Experian has created Experian Boost to help people bulk out their credit history by taking these unreported bills into consideration. It works by connecting to your current account via Opening Banking - with your permission (no banking login details are needed). Then it scans your payment history to see how well you manage your finances, based on your income and outgoings over the previous 12 months.
If you’ve been paying for your bills on time, then your credit score could get an instant boost - of up to 66 points on your Experian credit report.
Read more about Open Banking and how it works.
How can you sign up for Experian Boost?
Experian Boost is a free tool. To access it, you’ll need to create an Experian account or log in to your existing one.
Remember, you can withdraw Experian’s access to your banking data at any point if you change your mind.
How do Experian rate your credit score?
Experian is one of the three main credit reference agencies in the UK. (The other two are Equifax and TransUnion). It’s worth noting that each agency uses their own scoring systems, so, you’ll have different credit scores with each one.
Experian will rate your credit score on a scale of 0-999. They class a ‘good score’ as anywhere between 881 and 960.
Lenders check your credit report when you make a credit application. The more responsible you are with borrowing, the higher your score should be – and the more attractive you should come across to lenders. You may find it easier to get credit and with lower interest rates as a result.
Could your credit score go down?
Experian state that your credit score will either increase or stay the same with Experian Boost – it won’t go down.
What else do you need to know?
Bear in mind that if your credit score does increase using Experian Boost, lenders will still be able to see your pre-boost score. Not all lenders are participating at the moment. Those that are participating, will use their own discretion to decide whether they’ll take your boosted score into account when you apply for credit.
Also, each lender uses their own criteria, and your credit score is not the only factor they consider when you apply.
Read on to find out why your credit score might not be as important as you think.
Signing up to Experian Boost could be a good way to get some recognition for paying your TV subscriptions and council tax bills on time, every time – if you already have these expenses. But remember, having too many outgoings can put some lenders off if it reduces your affordability for credit - so it’s a balancing act.
Read on for more ways to bulk out a thin credit history.
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