Experian boost is a new feature from the Experian credit agency advertised as a way to give your credit score a boost. I thought it would be useful to look into it to see if it can improve your chances of being accepted for a Mortgage.
What is it?
I think they can do a better job of explaining it. In their own words
It lets you share information about your regular spending, such as payments to savings accounts, Council Tax payments, and digital entertainment payments to the likes of Netflix and Spotify. If you’re making payments like this regularly, and not spending more than you earn, you could get an instant boost to your credit score.
https://www.experian.co.uk/consumer/experian-boost.html
How does it work?
Some of the things you pay for do not appear on your credit report, things like Council Tax, Streaming services etc. The idea appears to be that these will now show on your credit as Experian will get the payment history from your bank statements through open banking.
If you have little or no payment history, this will add more data to your credit report which will in turn theoretically give more data and so a higher score.
Will it help my Mortgage application?
The honest answer is we are not sure. On the one hand, more data should boost your score (assuming your payments are made on time). However, we are not sure if this information gets shared with the mortgage lenders.
Even if it is, we are then now sure if lenders put it into their algorhithm when scoring our application. Ultimately Mortgage lenders do not use your credit score from experian, equifax or transunion for your application, they score you using their own internal scoring method.
In addition to that, there are 3 credit agencies. Different lenders use different credit agencies as mentioned above. Some Mortgage lenders will use one of the 3, others use 2 and a minority of lenders will use all 3 agencies. It could well be that a lender will never even pick up the extra information.
It appears that this is a way to get more data in order to give a better overall picture of your situation when obtaining a credit check.
If you have bad credit, this is unlikely to help. If your credit history is limited or a minor historic blip, this may well be the difference between being accepted or not. However using Experian Boost with a lender who uses experian may not necessarily be the best option for you.
Summary
This is still very new. We have not heard anything from Mortgage lenders about it.
There are plenty of reasons why it may not help:
- Not all lenders use Experian,
- Lenders may not use this additional information,
- The score experian provide you does not go to Mortgage lenders,
- It appears to be a slight boost.
However, that being said, for the moment at least Experian says it will not cause any negative effect. On that basis alone it seems like there is no down side. However that could change down the line.