Credit reference agency Experian has launched a service that gives people the chance to improve their Experian credit score by offering a "boost" for good habits, such as regularly paying money into savings or investment accounts or always paying for their Netflix, Spotify or Amazon Prime on time. Experian Boost, which was first launched in the US at the beginning of last year, before being brought to the UK in November 2020, promises an uplift of up to 66 points. What's more, the service is free and - they claim - completely safe, with no risk of your Experian credit score being negatively impacted by going through the process.
In this article, we explain how Experian Boost works, explore if it is likely to help improve your Experian credit score and look into the small print to assess if there are any risks involved in using the service.
What is Experian Boost?
A credit score is a barometer of your financial health and is a key factor in determining whether a lender will approve you for a personal loan, mortgage, credit card or other financial product. However, it is important to stress that there is no such thing as a universal credit score. Individual lenders, such as mortgage companies, will use their own scoring system, based upon your credit report, to determine whether to lend money to you. Lenders will use the information on your credit report, using one of the three credit reference agencies (Equifax, Experian and TransUnion) to calculate a score. Different lenders will use different credit reference agencies. In order to help consumers keep tabs on their 'credit score' Equifax, Experian and TransUnion each calculate a credit score for you based upon the information on your credit report with them. As such your credit score may be different, depending on the credit reference agency you choose, for example, Experian scores you between 0 and 999 whereas TransUnion will score you between 0 and 710.
Ultimately whichever credit score look at, the higher your credit score the better your chances of being able to access better products at more favourable rates. Therefore, being able to improve your credit score with Experian in a quick and easy way is very attractive. This is where Experian Boost comes in.
Agencies such as Experian, Equifax and TransUnion calculate your score by taking into consideration:
- Your personal details - your address and whether you are a renter or homeowner, employment status and salary, and your marital status are all used to help build a profile of how you are likely to behave as a borrower
- Credit history - it shows previous and current debt and how well you have serviced it, including your record for making payments on time
- Enquiries/applications - your score is influenced when you apply for bank accounts, mortgages, credit cards or other types of finance. Too many unsuccessful applications are detrimental to your credit rating
- Public records - including CCJs, IVAs or bankruptcies
Experian Boost adds an extra dimension to this calculation, connecting to your current account to observe "trends that show a strong payment history" with companies other than mortgage lenders, credit-card issuers or other finance companies. The three categories they include in this analysis are:
- Payments into a savings or investment account, such as an ISA
- Council-tax payments
- Subscriptions to digital entertainment, such as Netflix or Spotify
It looks for positive examples of payments over the previous 12 months, using these to work out what level of "boost" to award, with the maximum being an additional 66 points on your overall Experian credit score. This information is passed on to lenders when you apply for credit to help support your application.
How does Experian Boost work?
The new service requires users to have an Experian account, which is free to sign up for. Once you have opened your standard account, you click through to the Experian Boost function and complete the following steps:
As your existing account already includes your personal details, you simply have to follow the instructions to connect to your current accounts - there is the option to connect multiple accounts - in a process that does not reveal your bank log-in details to ensure security.
Experian Boost scans the account for the previous 24 months for examples of "good payment trends", although the final score is based on activity over the previous 12 months.
The information is processed and an aggregate score of up to 66 points is calculated. This boost is then added to your overall Experian credit score, up to a total maximum of 999, which is a perfect score.
When you apply for credit, your new credit score will be shared with lenders, as well as a summary of the information used to calculate the boost. You have the choice to stay signed up to Experian Boost, which means it continues to run a regular analysis of your accounts and will inform you if you subsequently qualify for a further boost. Alternatively, you can choose to close your account.
Is Experian Boost safe to use?
Experian Boost utilises "open banking", which is the result of a series of reforms in the financial sector that has led people to be able to share their financial information - including current account data - with other banks or third parties. By signing up to use Experian Boost, you are giving permission to Experian to access your current account and draw data from it. In return, Experian promises to access, analyse and store your data securely.
In practice, this means safeguards have been put in place, such as ensuring that bank log-in details aren't shared or stored by Experian and that all data is protected by end-to-end encryption and is stored securely. As a company already responsible for accessing and handling sensitive financial information, Experian is confident in its ability to protect your data.
In terms of how it uses your data, it is worth considering how comfortable you are with your data being shared with other third parties, apart from the lenders who are assessing your score for the purposes of approving a line of credit. There is the option to opt-out of the data being shared with other third-party companies, so it is important to read the terms and conditions carefully and act accordingly.
Importantly, Experian states that your credit score won't be negatively impacted by using Experian Boost. Any negative patterns or trends are not passed on to lenders or deducted from your credit score.
Who can benefit from Experian Boost?
Arguably there aren't any reasons not to use the service as it is free and won't have a detrimental effect on your credit file. However, there are some people who are more likely to get a positive result from using Experian Boost, including:
- People just below the "good" or "excellent" credit score categories. For this group, securing even a small boost could help them meet the eligibility criteria of a different range of loan or credit products, perhaps, for example, getting a better rate on their mortgage or being accepted for a premium credit card.
- Those with little or no credit history as it gives a quick boost without having to take out a credit-builder credit card or using another service that may take months or even years to make a significant difference
- Those who know they have a good history of making payments on council tax or subscriptions and/or regularly make payments into savings or investments, ensuring you'll get the maximum boost to your score
It may not be suitable if:
- You already have the maximum credit score of 999 as, obviously, you can't improve your score any further
- You know you have a lot of missed payments on your current account, which will mean you are unlikely to get any improvement in your score by undertaking this process. This also applies if you don't have pay council tax, have any digital subscriptions or pay money into a savings or investment account
Pros of Experian Boost
- It's free to use and is easy to sign up to, particularly if you already have an Experian account
- It provides an instant boost, which is useful if you're planning to apply for credit in the near future
- It doesn't pose a risk to your credit score as it only focuses on the positive trends within your accounts
Cons of Experian Boost
- The effectiveness of the boost to your score will only be relevant if the lender gets its information from Experian. It won't feature on your Equifax or TransUnion scores
- It's unclear how lenders will choose to use the information provided by Experian Boost, particularly at a time when many are tightening their lending criteria
- It won't be beneficial to everyone, with certain people unlikely to get any uplift in their credit score from using the service
- Only available to Experian customers
Experian Boost alternatives
One of the main drawbacks of Experian Boost is that it only boosts your Experian credit score. However, there are alternative free services that can be used to improve your credit score with all three credit agencies (Experian, Equifax, TransUnion) such as LOQBOX. Read our full LOQBOX review.
How else can I improve my credit score?
For more advice on additional steps you can take to improve your credit score, read our article "How to improve your credit score quickly"
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most
of your money. Find your nearest qualified and regulated adviser using this VouchedFor search tool.