Millions of people could get an instant credit score boost thanks to a new tool from Experian, which allows you to share previously blocked information about your salary, local tax payments, savings and even memberships such as Netflix.
The tool called Experian Boost uses open bank, which allows you to grant Experian permission to view your current account transactions without revealing login information. With access to this information each month, Experian can determine if your spending reflects habits that potential lenders would find interesting.
Experian estimates that 17 million people could benefit from an instant increase in their credit score. In particular, it has the potential to be of great help to those with “thin” credit histories – for example, young people who have never had a credit card or loan before, or simply those who have not had a credit card or loan before. who did not need to borrow.
Here, which one? explains how open banking works and what you need to consider before signing up.
What is Experian Boost?
Experian Boost is the name given to Experian’s new free tool, where you can allow the credit reference agency to view the inflows and outflows of your checking accounts.
At the moment, it only supports the big nine banks that had to register to open the bank when it launched in 2018. These include Allied Irish Bank, Bank of Ireland, Barclays, Danske Bank, HSBC, Lloyds Banking Group, Nationwide, NatWest Group. and Santander. Other banks could be added in the future.
By giving Experian permission to access your accounts (including joint accounts) through an open bank, it will assess banking information in real time – none of which has traditionally been factored into credit scores. This includes your general income and expenses, as well as regular payments for housing tax, savings and investments, and digital entertainment services such as Amazon Prime, Netflix, and Spotify.
Experian says scores could increase by up to 66 points and estimates that one in 10 users could increase an Experian credit score strip.
It should be borne in mind that a huge amount of data is used to create your credit score, most of which you cannot unsubscribe from. Our 2018 survey – Credit rating: are you in the dark? – explore the power of credit scores and can help better understand how the process works.
Will my bank details be safe?
There are strict regulations regarding the use of open banking; third parties (like Experian) can only communicate with banks through the Open Banking Directory – and businesses must be regulated to be listed in the directory.
Access to your account is granted for 90 days at a time – after which you will need to re-authorize if you want Experian to continue to be able to access your current account information. You can revoke your authorization at any time.
Concerns about how your data will be used are particularly relevant given comments from the Information Commissioner’s Office (ICO) regarding the three major UK credit reference agencies last week.
The ICO’s two-year investigation of Experian, Equifax, and TransUnion revealed “significant data protection failures” in each of the companies, and specifically gave Experian nine months to make further changes before it was released. ‘he is not faced with other measures.
You can read more about this in our dedicated story, which describes five things you should know.
Could my credit score go down as well as up?
Experian says the current account information used for Experian Boost will only have two results – your credit score will improve or stay the same. He says there is no case in which your score will be reduced.
Your score will also not improve if you already have the highest possible credit score.
Other Ways to Improve Your Credit Score
If you can’t improve your score with Experian Boost, or if you don’t think it’s right for you, there are plenty of other ways to improve your credit score. These include:
- Make sure you are on the voters list Lenders use the Voters List to confirm your address for any credit application, so if you are not registered you might have a hard time being accepted for the products.
- End financial associations with former partners If you’ve opened a joint checking account with an ex-partner who has a lower credit rating than yours, banks may also look at their credit rating when you apply for a product. If you are no longer together, be sure to ask all credit reference agencies to sever this financial connection so that their financial situation does not affect you.
- Keep your credit usage low Try not to use more than 50% of your available credit, to show potential lenders that you are managing your current budget effectively – as this will make them more likely to offer you more credit.
- Get the most out of your rent payments Signing up for Credit Ladder can help private renters improve their credit rating. The third-party company notifies Experian when the tenant pays the rent, which means lenders can see that you are able to pay large bills on time.
Find out more: how to improve your credit score
What is open banking?
Open banking has been around since January 2018, when the Competition and Markets Authority (CMA) forced nine major UK current account providers to open their data to allow mobile and web apps to access it, with your permission.
The aim was to encourage innovation and competition, by making it easier to compare and change products and financial accounts.
Open banking shares open application programming interfaces (APIs), which are considered to be much more secure than the other “screen scraping” option. This is where some services ask for your bank details, which then allow them to collect the necessary data and could expose you to fraud.
Before granting access to your open banking data, always make sure to check if the company appears on the list of regulated open banking institutions; you can consult the third-party providers on the Financial Services Register.