- Especially if you’re young and don’t have an established credit profile, it can be difficult to get approved for credit cards and other types of loans.
- Credit-booster programs like Experian Boost™* and UltraFICO® can help people in this situation by allowing positive payment history for utilities and phone bills count toward their credit score.
- They’re also free to use, and there’s no risk of your credit score decreasing because you can leave out any missed payments.
- They’re worth considering if you consistently pay your bills and have little to no credit history, but keep in mind that they won’t fix the damage caused by debt, unreliable payments, and other problems that can impact your credit.
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Although your FICO® Score** isn’t a tangible asset like an apartment or a house, it affects many parts of your life. Your FICO® Score determines the interest rates you get on credit cards, mortgage loans, car loans and more. Your credit report will likely be pulled when you apply to rent a house or apartment, and even when you sign up for utilities like electric, water, or internet.
For people who are just starting out in life and have little to no credit history, getting approved for credit can be difficult without already having credit (what credit bureaus call a “thin file”). That’s where credit booster programs such as Experian Boost™ and UltraFICO® come in.
Credit booster programs have rolled out relatively recently to help improve consumers’ credit scores by letting positive payment history for select bills count toward your FICO® Score. The two main programs are free to use.
What are credit boosters?
To understand how credit boosters work, it’s helpful to know what makes up your credit score. Your FICO® Score is made up of five different factors:
- Payment history – 35%
- Amounts owed – 30%
- Length of credit history – 15%
- Credit mix – 10%
- New credit – 10%
Given how heavily payment history is weighted into your FICO® Score, it can be very difficult for someone who doesn’t have access to credit to have a decent score.
Payments typically reported to the credit bureaus are limited to things like car payments, student loans, and, mortgages. For a person who doesn’t have any of those payment types, the credit bureaus would report either a low score or that they were not able to provide a score in those cases.
So even if you’re paying your rent, cell phone, tuition, and utility bills, since they aren’t traditionally reported to the credit bureaus, they would not be included in the calculation of your FICO® Score.
Credit bureaus have recently realised that reliable payments of these types of bills may predict how likely someone might be to pay off their debt in general. Thus, the idea of a credit booster program was created.
There are two major credit booster programs – Experian Boost™ and UltraFICO® – and they work in similar ways.
Experian Boost™ was launched in early 2019, in an attempt to solve this problem and help more people unlock a good FICO® Score. To use Experian Boost, you must first create a free account with Experian. Then, you give Experian permission to access your bank account. Experian will then scan your accounts looking for monthly bills like water, electric, cell phone, and cable.
If Experian finds a positive payment history of at least three months for any bills like these, it will prompt you to add them to your credit report. These positive payments will likely raise your credit score – Experian claims that on average, users had their scores boosted by 13 points.
UltraFICO® is another credit booster program, created by a partnership between FICO, Experian, and Finicity. UltraFICO® works in a similar way to Experian Boost™ – its aim is to provide a more complete picture of a person’s ability and likelihood to consistently meet their financial obligations.
Both Experian Boost™ and UltraFICO® work by connecting to your checking or savings accounts. Experian Boost specifically looks at payments to water, cable and other utilities, while UltraFICO® looks at a couple of different things, including:
- How long your accounts have been open
- How recent and frequent your bank transactions have been
- If you have had consistent cash on hand
- A history of positive bank account balances
Are credit boosters worth using?
Credit boosters can make sense, but only for the certain types of people.
If you have an extended history of unreliable payments, a credit booster is not likely to help very much.
On the other hand, if you have:
- Little to no credit history (what credit bureaus typically call a “thin file”)
- Poor credit in the past but a recent history of reliable payment of financial obligations
- A credit score in the “grey area” (scores in the upper 500s to lower 600s)
… then a credit booster may very well help out. Since both Experian Boost™ and UltraFICO® only add positive payments to your credit file, there’s not really a downside to using a credit booster program.
Just understand that unless you fit one or more of the above categories, a credit booster program is not likely to make a huge impact on your overall FICO® Score.
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