Experian, one of the three major credit-reporting firms in the U.S., will start factoring your phone bill and utilities payments into your credit score in early 2019. This could become an easy boost to potentially increasing the credit scores for people who have low or no scores because of their limited borrowing history from banks and lenders. For the new free service, Experian Boost, you will be able to link Experian to the bank accounts you use to pay your phone and utility providers, allowing Experian to track your monthly payments, however, for now it won’t track missed payments.
When one well dries up, dig up another hole - Since the 2008 financial crisis, most financial lenders have tightened their loan evaluation criteria, but that also means that the same banks are all competing for the small percentage of “most creditworthy” borrowers. So with limited supply of “high credit” borrowers to loan money to, some of these banks are now seeking customers with weak borrowing history as a new revenue stream. Fair Isaac Corp. (creators of the FICO credit score), is also planning to launching a new credit score in partnership with Experian that will factor in your history of managing your checking and savings accounts. Basically, if you keep a few hunnids in your account and don’t overdraw for at least three months, your FICO score will be getting incremental boosts each month.
What’s the takeaway? - When payments like rent, utilities and phone bills start getting factored into your credit score, this could improve the chances of getting credit cards, personal loans and auto loans, because banks sees this as a sign that you will pay other bills as well. But like all good deals, there’s a catch: If you stop paying those phone/utility bills for three consecutive months, Experian will delete that phone/utility bill account from your credit report, your score will then be recalculated, which could cause your score to drop.