Experian, one of the three major credit reporting bureaus, wants to make it easier for people to improve their credit scores, which could be good news for many, including those aged 26 - 30 in Southampton, where the average score is 733.
The ears of first-time buyers are pricked as well as those just hoping to build their score and get access to cheaper deals. But can Experian Boost really improve a credit score that much and if so, how quickly and where can you sign up?
Is a low credit score bad?
Getting a mortgage with a low credit score is certainly possible but it might not necessarily result in the most competitive mortgage agreement. That’s because interest rates for mortgages are usually charged at a higher rate when the risk of the borrower defaulting is greater. Having a low score unfortunately makes you a less appealing borrower.
With that in mind, if you want to apply for a mortgage, it could be a good idea to improve your credit score to improve your eligibility for the best rates. There are lots of ways to do this, like:
Signing up to the electoral roll
Repaying debts (if it is affordable to do so)
Contesting debts or credit issues on your credit report that you feel are resolved or settled
Staying out of your overdraft and keeping your credit utilisation low, under 25%
Paying your utility bills on time and in full
For a maximum of 66 extra points to add to your credit score, you could sign up to Experian Boost.
What is Experian Boost?
Having recently launched in the UK after a successful launch in the US, this digital service aims to help people build a stronger credit score. How?
The online platform allows those that sign up to the free service, to log regular payments for Council Tax, Netflix and Spotify, which previously couldn’t be included.
If the payments are on the agreed date and are in full, Experian Boost uses the data to boost your score.
What does Experian Boost look at to decide my score?
Payments to council tax
Payments to online streaming services such as Netflix and Spotify
Regular deposits into savings, including ISAs
Your current account activity, including your income and outgoings
How does Experian Boost work?
Experian Boost assesses the data they pull from your current account, looking for trends that show strong payment history.
Paying into a savings account regularly can show promising signs of money management, as can payments to streaming services, so if you sign up, avoid missing direct debits or any payment plans you have in place.
The service provides a quick way for lots of soon-to-be mortgage applicants to improve their score as Experian Boost applies any positive change they find instantly.
That means that when you apply for a mortgage, lenders who access your Experian Credit Report can see your raised score alongside your credit history. They’ll use that information to decide if they’ll lend to you and if so, under what circumstances.
How can I sign up for Experian Boost?
If you want to sign up for Experian Boost, you’ll need to set up a login via their website. On signing up, you’ll be asked to connect your current account so that Experian Boost can assess your financial data.
Will using Experian Boost improve my credit score that much?
Experian claims that early analysis suggests 51% of people using the service will receive an instant increase to their credit score.
Among this group, more than one in 10 will move up an entire score band.
Experian Boost for mortgages FAQS
Can I use my council tax payments to boost my credit score?
Yes, with Experian Boost you can log your payments for council tax to improve your credit history by showing that you can keep up with regular financial commitments.
In the past, it wasn't possible to use payments like your monthly Council Tax bill to influence your credit score but now you can.
How much is Experian Boost?
It’s free.
Can signing up for Experian Boost make my credit score go down?
No getting an account with Experian Boost will not negatively impact your credit score. If Experian Boost concludes that your current account activity doesn’t suggest a good history of financial control, the data won’t be sent to lenders or credit reference agencies.
You can still choose to stay signed up with the service as overtime your data may change and your score could be boosted.
Will mortgage lenders see my boosted credit score?
Experian Boost works with a list of participating lenders which aren’t visible via their website. If you decide to apply for a mortgage, your chosen lender will see your credit score and refer to it when making their decision about whether you’re eligible for their mortgage agreement.
I have bad credit, should I sign-up to Experian Boost?
Lots of people avoid looking at their credit score, especially if they’ve been rejected for a loan or mortgage in the past because of their bad credit. However, there are simple things you can do to build it and Experian Boost could be a start.
Whether or not you sign up is entirely your decision but keep in mind that in some circumstances, your credit score could be improved which could ultimately lead to you having access to a wider range of mortgage lenders.
Talk to a mortgage broker about improving your credit score
Our advisors know the factors that lenders look at to make their decision and they’re determined to improve the likelihood of acceptance for borrowers just like you.
Your credit score is an area to discuss and your broker can certainly help with this as well as quickly comparing the market to source the most relevant lenders with the best deals.
Mortgages vary, as do people and our brokers understand this. They’re used to complex mortgage applications, so even if you think your credit score will hold you back, it could be worth getting some advice and planning your next steps.
Call us on 02380 980304 or make an enquiry. We’re here to help with non-judgemental advice to help you on your way to homeownership.
