The world of credit is changing. Previously, we could only increase our credit scores with credit cards, mortgages, car loans, and other loans. Not everybody has access to these types of accounts. Some people just don’t want to be in debt. Who can blame them? I hate the fact that I owe people money, but I have almost no choice.
Modern credit models are on the rise, which is excellent for the ordinary person. Modern credit models refer to data that is not currently used in “mainstream” credit reports. What it really means to me is getting credit for your regular monthly payments. Getting credit for your regular monthly payments is the future of credit. I get the question all the time, how does Experian Boost work? In short, your payments are now going to be taken into consideration. This proving that you make smart financial decisions.
Experian Boost allows customers to report utility and cell phone payments to credit scores. Essentially, you give Boost access to your bank account, and this allows the product to look at your bank account transactions.
The product will then identify your utility and cell phone payments and report these payments to your Experian credit score. Everything happens in real-time on your Experian and Fico scores! When you sign up for the free service, you will immediately see your increase in points. Now that is really cool!
Boost is adhering to the modern credit models. In the US, modern credit models are different from legacy credit in the sense that there is not yet a standardized method of reporting for all credit bureaus. The good news? Boost and other modern credit methods only report a positive payment history! If you miss a payment, it won’t be counted against you. This is different than legacy credit because missing a payment would hurt your credit score. Car payments, for example, are more legacy (outdated). A car payment is reported every month, whether you made a payment or not. This can be positive or negative. Keep in mind, a car payment can only be reported as late if you are 30 days late.
What about rent payments? Well, property managers and landlords are not required to report your payments every month. Previously, property managers and landlords only report adverse payment history, or when you miss a payment. It doesn’t have to be like this. There are many ways to report your monthly payments, and you could use all of them to your advantage.
Boost will work for a majority of people. It is primarily aimed at helping people with thin credit profiles. A person with a thin credit profile is someone with little to no credit history. As I said earlier, not everyone has or wants access to legacy credit. If you don’t have credit or have little credit, this is an excellent place for you to start. You can get a few points put on your credit score to kickstart the credit process.
Using Boost won’t replace the necessity of having a credit card. Still, it is an excellent place to start before getting your first card. Experian states that Fico 8 scores increase an average of 13 points. If this is true, they have helped over 1 million people, because, at the time of this article, the website states over 13,900,000 points boosted. Adding 13 points can mean the difference between a fair and a good credit score. A credit score is a huge factor in determining rates on loans.
In my opinion, this will work for a good amount of people. Even if you have a semi-strong credit profile, you could see a few points. If you have little to no credit score, you might as well sign up. It’s free! Experian estimates that the product could help up to 100 million people!
Well, you sign up, let the program view your bank transactions, then see your score increase! Monthly payments are a great way to improve your credit score. Using monthly payment reporting to your advantage is a great idea! Adding more to your credit score is a great idea, especially when what you’re adding can’t hurt you. Adding a few points to your credit score can be the difference between getting a loan or getting passed up. Not to mention, this is a free service. It really couldn’t hurt to give it a shot!