I received a text message that I can boost my FICO score for free with Experian Boost ™
I’ve seen TV ads for Experian Boost, but how does that work? I would think that the only way to boost my credit score was to pay my bills on time. It’s like saying, “Call this number and lose two pounds of ugly fat instantly”
OTOH, this particular text message might be a scam as the link was to rent2ownadvisor.com, so I ain’t going for it.
I know sometimes things are dire, but really, the only (or at least, best) way to raise your credit score is to make every single payment (for places that report) on time. Every one of them. After that, start chipping away at debt. Incidentally, getting your credit limits raised will also make you appear to have less debt since they look at the ratio of your balance to limit.
It would appear that Expieran Boost is simply another credit score. If I’m reading it correctly, it doesn’t raise your credit score, it just uses a different formula that will tend to give produce a value higher than then your FICO score.
Most people that pull your credit report are only interested in your FICO score and/or they calculate their own score depending on what they place more or less importance on.
Regarding that text message, if you want to see what Expieran Boost is about, I’d suggest just going directly to their site and doing it from there, not clicking on a link in a random text message.
It sounds like Experian wants your data, and companies have found out it’s super easy to get people to opt into that if they get some free advantage. There is a small drawback in potential privacy risks, though it’s not like thousands of other companies aren’t collecting your data every day.
You don’t have “a” FICO score; you have several dozen. Fair Isaacs and its competitors have a number of different models for assessing credit, each slightly tweaking the underlying assumptions and emphases used in their calculations. For example, some models ignore low-value amounts in collections (sub-$100), some give added weight to high credit card balances, and still others focus on mortgage risk. Experian Boost is designed for people who don’t really have much of a credit history, good OR bad, by allowing utility and cell phone bills to be included in your scoring.
Here is an older article that concluded an American adult with an extensive credit history might have 56 different scores (FICO and their major competitor Vantage) across the three major credit bureaux; which particular score gets reported to any particular lender depends on that lender’s contract with the specific bureau. For lenders who rely on FICO 8 or 9 scores from Experian, Experian Boost helps; for lenders who rely on FICO 5 from Equifax, it won’t matter at all.
That’s where I’m seeing a problem. The service that Experian is supposedly providing is figuring out an objective credit rating. If you can “boost” your Experian credit rating with a simple one-step process, aren’t they acknowledging that an Experian credit score is subjective and they can raise or lower at will?
Not really. They’re selling a credit rating that is predictive, and their customers are looking for the scores that are best at that. If Experian can show that their new score is a better predictor of certain types of risk then they have a competitive advantage.
As Telemark notes, a credit score isn’t intended to be objective: it’s not a measurement against some absolute standard. It’s predictive: based on the historical information we have available about this person, and based on a statistical analysis of how other people with similar histories have behaved, here’s how we think this person is likely to behave in the future. Tweaking any aspect of the process will change the outcome. Most of the various FICO models tweak the second part (the analysis), while Experian Boost tweaks the first part, the information about how you have behaved in the past.
Utility companies do not routinely report information to the credit bureaux; they never have, so for most Americans the regularity with which you pay your electric or water or phone bills is simply not available to Experian, etc., and cannot be included in their standard scoring models. Experian Boost allows you to add utility payments into the mix, to ask that Experian consider your payment history with those kinds of bills alongside your mortgage and auto loan and credit card bills. Presumably, Experian has evidence to show their paying customers (the lenders) that these kinds of bills are valuable information that improve the model and improve their ability to predict what you’re going to do in future.
But Experian can’t argue that both types of credit reports - those with utility bills included and those without utility bills - are equally good at predicting credit worthiness. They’re giving two different scores after all.
Shouldn’t the businesses that are making their lending decisions on the basis of Experian reports - and are paying Experian for those reports - insist that Experian use the model that produces the most accurate results?
Yeah, after being unemployed and having to let 2_credit cards go into collections, my Credit scores really only started improving when I signed up with some credit notification thing through my apartment complex that, for $5 a month (it’s opt in, not mandatory) notifies whoever every time I pay my rent and water on time. It’s definitely helped me re-establish my Credit and for me the $5 a month is worth it.
Not everyone is making the same lending decisions, or even lending at all. As a landlord, I’d like to know if a potential tenant pays their bills on time. Their history of paying their power bill is important information to me. Their debt to credit ratio is not. For a used car lot or credit card company, it might be the other way around. I can see why having different scores for different companies could be a valuable service.
Experian isn’t saying that the two scores are equal. They are selling a range of products to a range of customers at different price points. These aren’t the only two reports that they sell; FICO scores cover a fairly wide range of scenarios and are used for a variety of purposes. There would be no point of that if they all gave the same number.
Most accurate results for what purpose? Experian already sells a dozen different kinds of scores predicting credit worthiness under conditions and for different purposes; this is just one more.
There’s also the point that lenders are already aware that the score is only as good as the information being fed into the model, and Experian does not control which creditors report information. Some creditors report to all three major bureaux, some report to only one or two, and a few creditors for whatever reason don’t report to anybody. Utility companies, generally speaking, don’t report to anybody, so even if the information would be good and valuable, it’s not available for most customers no matter how much lenders want it.
Experian isn’t issuing the Score. Your “Credit Score” comes from one of several analytical credit scoring models created by another company–usually Fair Isaac Corporation (FICO) or VantageScore Solutions, LLC. The score is determined using data from one of the three national credit bureaus: Equifax, Experian and TransUnion. For your information to make it into the databases of these companies, your creditors need to report it! Your cell phone company and utility company could report your payment history, but they just don’t. Like slash2k mentions, there are tons of different kinds of credit scores that appeal to different lending institutions. One is not necessarily the best universal scoring model. So lenders will determine which model works best at predicting risk and assessing credit worthiness of potential customers.
So what Experian is doing with Boost, is saying, “Hey, there are a couple models, (specifically the FICO 8, FICO 9, VantageScore 3 and VantageScore 4) that actually factor in history of payments to utility companies. But we don’t have that payment hisotry in our databases because it doesn’t get reported. In fact, none of the other two bureaus have it either! If we could get customers to allow us to scan their bank accounts, we could add that to our database. And people will actually do this because it will likely give them a higher score. The result will be a more thorough database for us. And as a bonus, we’ll get more people to sign up for our credit monitoring services since they have to register an account on our website anyway, we’ll be able to solicit them until they sign-up or unsubscribe!”
That’s what they’re getting out of it. They’re not saying that one score is better than another–they don’t even control the scoring. They’re telling large companies that they have the best, most thorough data.
As I mentioned, those businesses are choosing two tools to make their lending decisions: 1) Which scoring model to use; 2) Which Bureau’s data to use. The FICO 8 happens to be the one used by most lenders, so as long as the lender is using that model, AND they are using the information from Experian’s database, then the Boost will come into play. If they use a different model, or a different bureau’s data, then Boost won’t matter.
I just noticed that the FICO 9 score places a higher emphasis on Rental Payments than some of the other models. Most landlords and property managers don’t report your rental payment history. Experian could offer a service called Boost Plus that will scan your bank account for rental payment information, and add that information to its database. This, in turn, would effect a person’s FICO 9 score if pulled using Experian data.
To give one example - after graduating you move to the city (so no need for a car & subsequent car loan) & get a job & an apartment with a roommate, whether that roommate is a sibling, friend, or SO. Their name is on the lease & your name is on the account for utilities. you are also ‘good’ with your financial management & mostly buy things using your debit card so that you don’t spend more than you have. This means you don’t use your credit card every month.
Your standard FICO score is not going to be that good. Not because you’re a deadbeat you just don’t have a history with them. Adding your utility payments to that mix shows that, yes, you can & do pay your bills on time & that would serve to raise your score x points, according to the formula.
I’ve also heard that 1%[sup]ers[/sup] have lousy credit scores - they own their home(s) so no rent or mortgage, the pay cash for their car(s), again no payment history. It’s not that they’re not good credit risks it’s just that they don’t utilize the normal things that make up the models.
apparently, there’s 4th bureau called SageStream (Innnovis), supposed to be part of Lifelock, that has strange criterion for their credit scores. I applied for loan from Discover and turned down, even though I had paid off loan with them in 2017, and had FICO scores 780-800 with big three. But Sage only gave me score 450! When I asked why, they said I changed my telephone, limited rental history (2 in 14 years), days since recent inquiry (1 in year). After writing Discover they turned around and offered $35000 loan (go figure). Since Discover, Ally and Sprint use Sage, consumers will lose out. I thought score were supposed to measure whether consumer pays their bills, not telephone numbers?
Credit scores are a prediction of your ability to pay your bills in the future. Lots of factors can go into that prediction. If there is a correlation between your phone number changing and an uncertain economic state then that would be something borrowers would be interested in.