There’s been a lot of buzz lately around the new Experian Boost feature. What is Experian Boost exactly? Well, to put it simply, it allows consumers to submit a variety of bills to Experian in order to increase their credit score. We’ve noticed that most of the focus has been on the benefits of this new feature, but not much has been said about its disadvantages. In this article, we’ll cover both.
ADVANTAGES OF EXPERIAN BOOST
Strictly from a consumer perspective, Experian Boost can look like a dream come true. You basically get extra credit for the utility and mobile phone bills that you’re already paying for. Normally these payments don’t get recorded by credit bureaus. You can simply connect the bank accounts you use to pay bills and choose the positive payment history you want added to your credit file.
This gives consumers power to take control of their credit history. It’s a free service, allowing people to easily increase their credit scores, including those with poor or limited credit. Many other services like credit repair could cost thousands of dollars without having a lasting or significant impact.
DISADVANTAGES OF EXPERIAN BOOST
You’ve likely heard many of those advantages, but here are a few things that don’t get discussed. For instance, when you report your utility and mobile phone bills, it also impacts your debt-to-income ratio. So even though you might be increasing your credit score, lenders could view you as more of a risk. Credit scores are only one factor that lenders look at when making a decision for credit application approvals.
Experian Boost has also raised some concerns with lenders that use Experian’s credit reporting services. Basically, giving selective power to the consumer creates the potential for credit manipulation. For instance, a consumer could report on their positive payment history of their smaller phone bill, while also keeping missed utility payments hidden. This artificially boosts the consumer’s credit score when a more comprehensive assessment could suggest the consumer poses even more of a risk to lenders.
AN UNCERTAIN FUTURE
How the chips will fall is still up in the air. Will lenders stop trusting Experian because of Experian Boost? Or is this an evolutionary next step in the credit assessment model that all other credit reporting agencies will pursue? It may be too early to tell. But it is important to look at all angles, not just the apparent advantages.