Checking your credit score can be a scary process but it’s important to keep an eye on it.
If your credit score is low, there are things you can do to improve it.
And now Experian – one of the leading credit reference agencies – is introducing new ways for them to judge your score.
Using Experian Boost, they will take things like paying council tax, your savings and investments and crucially, making regular payments for services like Netflix, Spotify and Amazon Prime.
According to their analysis, over half of people (51%) using Experian Boost will receive an instant increase to their score, meaning around 17 million consumers are set to benefit.
The higher your score, the better the chance you have of securing credit along with lower interest rates because you are predicted to be likely to pay back your borrowing.
Experian is one of three big credit reference agencies in the UK – the others are Equifax and TransUnion.
They all collect information on your borrowing history and present it in a credit file, like a financial CV. Each one uses slightly different information and they use different numbers to grade your chances of getting credit.
Experian is the first of these CRAs to use this extra information to judge your credit score.
They will ask if you want to add new relevant and real-time information including total incomings and outgoings, as well as a range of popular, regular payments not traditionally factored into credit scores.
Usually, the credit score is based on loans, credit cards, mortgages, mobile phone contracts, bank accounts and even some regular household bills such as energy, water and broadband.
But it can be hard to improve a low credit score, especially if you are a renter without a mortgage, as getting cards or loans to show you can make regular payments is much more difficult.
The idea is that adding extra information can help with this, allowing you to access better credit and slowly improve your score.
At first, Boost will focus on looking at council tax, savings & investments and digital entertainment services such as Netflix, Spotify and Amazon Prime, but more things could be added in the future.
To benefit, you must be paying for the services yourself, so using another person’s account won’t help your score.
The maximum amount people can boost their score by is 66 points and Experian promises that no one will see their credit score go down as a result of signing up to Experian Boost.
Clive Lawson, Managing Director for Consumer Services at Experian, said: ‘Experian wants people to get credit where credit is due. We are always pushing the boundaries of innovation for two key reasons – to give consumers more control over their financial lives, and to ensure lenders have the information they need to make informed, responsible decisions.
‘There’s never been a more important time for people to engage with their credit scores and Experian Boost will help them to do this. We are incredibly excited to provide this ground-breaking, free service now to help build better financial futures for consumers in the UK.’
Of course, you should be careful when accessing credit to make regular payments and not to let it build up into debt.
But using credit properly to improve your score can help you access better deals and means you are more likely to be approved for a mortgage.
Do you have a story to share?
Get in touch at firstname.lastname@example.org.
MORE : Can you build up your credit score by paying rent?
MORE : How to improve your credit score
Source: Read Full Article