Written By: Stephanie R. Yates, Ph.D., AFC®, CFP®, RFC®
You may have seen the commercials and maybe even had a client ask about it. What exactly is Experian Boost?
Experian Boost is a tool that consumers can use to increase their credit score by enabling the credit bureau to factor in payments that are traditionally not incorporated into credit scores. These include utility and telecommunications payments. This tool is offered exclusively by Experian and the first time that consumers have had the ability to directly impact their credit history.
How Does it Work?
Consumers must first open an Experian account and then grant Experian permission to connect to their online bank accounts to identify utility and telecommunications payments. After a consumer verifies the data and confirms they want it added to their Experian credit file, Experian will send the consumer an updated FICO® Score. If at any time, the consumer wishes to stop sharing this payment information, he or she can opt out. Also, there is no limit to the number of times a consumer can use Experian Boost.
Does it Work?
Through August 2019, Experian reports that more than 60% of consumers who use Experian Boost see an improvement in their credit scores with an average improvement of 13 points. Also, Experian reports that 5 – 15% of consumers who use Experian Boost see a FICO® Score improvement significant enough to move them from one category (fair, good, excellent, etc.) to another. Geographically, West Virginia shows the highest average Experian Boost Increase at 16.5 points while California added the most points with 1,000,050 potentially indicating a higher participation rate in California. Experian found that in Alaska the greatest percentage of Experian Boost users saw a FICO® score increase at 68.7%. Drilling down to the metro level, Experian Boost users in Terre Haute, Indiana saw the highest point increase with 19.3 while the most points were added in Dallas-Fort Worth-Arlington, Texas with 352,862. Finally, Florence-Muscle Shoals, Alabama has the greatest percentage of Experian Boost users who realized a FICO® Score increase at 74.3%.
For Whom is it Intended?
This tool is designed for consumers who are working to build or rebuild credit. Experian data shows that Boost users who have a poor FICO® Score have seen significant improvements. For these consumers, 86% see an improvement in their FICO® Score and the average score improvement is 22 points. Movement to a higher FICO® Score tier is more pronounced for consumers in lower tiers also. 66% of Experian Boost users improved from poor to fair FICO® Score while just 2% of Experian Boost users improved from a very good to exceptional FICO® Score.
This may also be a valuable tool for the many consumers who are considered “credit invisible” or “underscored” because of limited information reported to the credit bureaus. Experian specifically identifies these individuals as those with “thin” files which means that they have four or fewer credit accounts. In fact, Experian reports that 10% of consumers using Experian Boost became scoreable after participating. 87% of those with thin files saw an increase in their FICO® Score. 16% moved into a higher FICO® Score tier and 46% moved from a thin file (underscored) to a thick file.
How Much Does it Cost?
The service is free.
How Long Does it Take?
The entire process of enrolling, opting in, connecting bank accounts, and delivery of an updated FICO® Score takes less than five minutes on average.
Clients looking for a way to improve their credit score might want to consider Experian Boost. This free service is quick and may result in a double-digit FICO® Score increase in as little as five minutes. To learn more or get started, go to https://www.experian.com/consumer-products/score-boost.html.