Apr 3, 2019
Today we’re going to take an in-depth look at Experian Boost
score,
One of the problems that FICO® has had in the past with other
versions of a new FICO® score was trying to score people with a
thin repository file. FICO® was trying to create a reliable scoring
model that used fewer data inputs.
The Experian Boost® score is the first-time additional data has
been used from a financial intuition to supplement the repository
file. They’re connecting bank payment history into this repository
file, looking for consistent payments to creditors. Experian Boost®
will be included in FICO 8 and FICO 9 credit scores
FICO® has tried this in the past, they called it XP, they called it new FICO®, many times over the years they’ve tried to create a FICO® score using less information and it never worked. What’s different about this is that they are getting more information from financial institutions.
What Experian Boost® is looking for is a series of payments to a creditor like a utility company or a cell phone provider, something that the consumer has set up to automatically pay or to pay through a bank account. Experian Boost® is linking consumer accounts much like an online mortgage application or TurboTax, they’re interfacing with the consumer’s financial institutions. Creating a credit history based on past payments that the consumers have made and adding it to the Experian repository file.
I had made some payments out of my Bank of America account and when Experian Boost® reviewed that information. it gave me a few more points now this is not designed for somebody with a long credit history is really designed for somebody with a thin credit history somebody who does not have a lot of credit.
The drawbacks from a lending perspective is that Experian Boost® will not look at derogatory information. It looks at payment history in consumer’s bank accounts. In my specific situation, it found a few payments out of one of my accounts and added it to my repository file.
My DTE account added to my Experian® Boost score; 19 payments, a
utility, average payment amount, then it calculates my score new
score. In this situation, my score happened to go up, a few points
from the boost.
Experian Boost® will improve both FICO 8 and FICO 9 scores if your
financial institution uses one of those scoring models then it
could help you get a better rate on some financing.
I’ll be at the Building Community Conference in Lansing speaking about all the latest developments in credit scoring.