The traditional ways to build credit has always been to open credit cards and/or open installment loans. These can still be great options in terms of building credit. However, what about the other items you are paying money every month such as your utilities and rent? When a consumer is paying on time with many of their larger fixed bills, and not getting recognition on their credit report, it can be frustrating. Some recent developments have changed this for the good of consumers.
A consumer is now able to use a new program from Experian called Experian Boost. This is a free service from Experian that allows Experian to take a peek at utility bills you are paying through your bank account. These utility bills will then appear on your credit report reporting to Experian only and may give your credit score a boost. If you are applying for a mortgage make sure to check with your mortgage lender first to make sure there are no problems with kind of activity on your credit report. Some mortgage companies may not allow this data on your credit report as a credit boost. These items will appear on your credit report as a self-reported utility.
For those clients paying rent month in and month out with no recognition of on-time payments on their credit report, there is now a solution for this. We have partnered with a company that will take on-time rental payments and report them to Transunion and Equifax. They can also report rental history going back two years giving consumers some instant well- earned credit history.
These options can be a big alternatives way to increase your credit scores. We recently had a client that received an increase of 46 points on Equifax and a 20 point increase using Experian boost. These are some great credit building solutions for those consumers trying to build their credit with no credit or thin credit history files. For consumers that have long credit history and higher credit scores, will likely not see any benefit from these programs.