Most of us by now have heard at least a little bit about Experian’s new(ish) product called “Boost”. The claim is simple, you voluntarily sign up on their website to allow them to search your bank records and add normal monthly bills such as utility bills or insurance payments to your credit report.
The idea is this will add depth to your credit report, which will allow you to receive credit for things you always pay, but since they have not been reported to your credit report you never get any value out of them.
Sounds like a no brainer but like most of these things we need to discuss a few potential troubling aspects.
- If everything worked just like they claim, it will only affect your Experian report. Leaving Equifax and Transunion both untouched. This is a little problematic because as you know mortgage companies are always going to use a person’s middle score for qualifications and pricing, not just one score.
- Most FICO score models do not read these types of accounts as a scoreable account. So even if they get added, the score usually will not be affected like one had hoped. This happened a lot with getting rent added to a credit report. For years this was a long process to accomplish and if someone was successful and got it added, it only led to disappointment because “rent” was not a scoreable tradeline in the FICO model.
- On the mortgage side of things- one BIG thing to keep in mind is obviously debt to income ratios. By adding more payments like a cable bill, cell phone payment and a utility bill or two all you have done is ADD more monthly payments to a credit report! Most troubling is the payments that have been added, are payments that most mortgage companies are not usually factoring into someone’s debt to income ratio! This COULD be the worst part of this, by “trying” to improve your credit. At the end of day, you may not improve the score at all and also end up hurting your debt to income ratio!
Bonus tip- why do you think Experian REALLY started this process? In my opinion there are two big reasons…#1 to get more people added to their website on a monthly basis…fine. #2 you have voluntarily given them permission to look into your monthly spending habits on things they currently do not have access to. I think the big picture here is they are trying to use this data for marketing purposes to other companies. I don’t know about you, but the less control and information the credit bureaus have about me the better.
Just a few things to think about, but in my opinion, I would be careful about recommending this product to people as I think the potential HELP is very small and as mentioned there could be many unintended consequences.