MSE News

Paying your Netflix bill on time could boost your credit score under new scheme – but how good is it?

Paying your Netflix bill on time could boost your credit score under new scheme – but how good is it?

Consumers can now choose to have regular spending such as Netflix subscriptions and council tax payments factored into their Experian credit scores – but credit providers appear hesitant to take this new info into account, with those we've heard from saying they have no plans to start using it.

Experian's free Boost service, which launched last week, lets people share details of some everyday transactions. This then allows Experian to create a "boosted" credit score, which takes this behaviour into account – though lenders and other credit providers will still be able to see customers' pre-boosted scores. 

Experian says sharing this data can strengthen consumers' payment histories, and more than 50% of consumers who use Boost will see their credit scores increase. And crucially, it says using the Boost service will never damage your credit score.

However, the early signs are that not many credit providers will be using this extra data for now. All of the eight lenders and telecoms companies we've received responses from say they won't be taking Boost data into account when assessing somebody's creditworthiness, at least not for now – so it could be worth waiting to see if it's taken up by more credit providers in future before deciding whether to join. 

See our Credit Scores guide for information on how credit reporting works and ways to improve your score. Plus, we've got a separate guide explaining how you can check your credit report for free.

How does Boost work? 

Experian already uses information such as court records and how you use credit cards, loans, mortgage products and more when giving you a credit score. 

But when consumers sign up to Boost, Experian will also use your last 12 months of 'Open Banking' data to find information about certain other payments.

Open Banking is a series of reforms to how banks deal with your financial information. In plain English, it means that banks and building societies must allow regulated businesses access to your financial data, such as your spending habits and regular payments, as long as you give your permission. 

If Experian finds generally positive information in your Open Banking data – for example, you're regularly paying into savings accounts or paying your council tax or digital subscriptions on time – it will use this to calculate a boost to your credit score, which could mean an increase of up to 66 points. The maximum score someone can be given with Experian is 999.

When you apply for credit, firms that use Experian will be able to see your boosted score as well as a summary of the boost – though it's up to the company you're applying with to decide if and how they'll use the extra information. Boost currently takes three types of transaction into account: 

  • Council tax payments
  • Digital subscriptions (eg, Netflix, Spotify or Amazon Prime) 
  • Payments into investments and savings (eg, ISAs and other savings accounts)

Experian wouldn't give us details of exactly how the different payments would be taken into account – for example, if paying your council tax bill would have more of an effect than paying your Spotify subscription – saying only that factors would be "weighted appropriately".  

It will also look at the total amount paid into and out of your current account to see whether you earn more than you spend. 

At the moment, Boost doesn't record other types of transaction (though transactions such as credit card and mortgage payments will already be taken into account for your pre-boosted credit score). Experian says the Boost scheme will continue to "evolve", but didn't give any more information about which transactions could be added in future. 

Which lenders and utility firms will be using the Boost scheme?

So far none of the lenders or utility firms we've spoken to has said it'll be taking up the Experian Boost scheme – at least not for now. Here's what firms have told us:

  • Eight lenders and telecoms providers have told us that Experian Boost, as it stands, won't be used as a factor when they assess customers' creditworthiness. These firms are Clydesdale Bank, EE, Nationwide, Santander, Three, Virgin Money, Vodafone and Yorkshire Bank. However, none of these ruled out the possibility of using Experian Boost when assessing customers in future.
  • Ten lenders are yet to respond – we'll update this section when they do. These are the AA, Bank of ScotlandBarclays, British Gas, BulbHalifaxHSBCLloydsNatWest and TSB.

What are the pros and cons of the Boost scheme? 

The main pros of the Boost scheme are that it's free to use, and Experian says it will never damage your credit score as any information that wouldn't boost your score will be disregarded and won't be shared with firms searching your credit report.

This means in theory you have nothing to lose by signing up to the scheme, so it may be worth a shot for those who are looking to boost their credit scores.

But on the other hand: 

  • It's difficult to know how much difference, if ANY, your "boosted" score will make. While Experian says its Boost service could boost customers' Experian credit scores, the early signs are that lenders and other credit providers aren't immediately taking up the new Boost data, as we explain above – and they'll still be able to see your pre-boosted score.
     
  • You'll need to be happy to share your data with Experian. When you connect your bank account to Boost, Experian will be given information such as your account details (including your account name, number, sort code and balance), details of your transactions going back up to two years, and account features.

    Experian will have access to your data through Open Banking for 90 days, at which point it will ask you to renew your permission if you want to continue. If you don't give permission again, you'll lose any increase to your credit score you'd gained through Boost. 

  • It'll only help your Experian credit score, and won't make a difference if your credit score's already perfect. Of course, if you already have a perfect credit score, the Boost service won't improve it further. And if a potential lender or utility company uses a different credit reference agency such as Equifax or TransUnion, any boost to your Experian credit score won't make any difference. 

How can you sign up to Boost? 

You can sign up to Boost online, and will then need to connect your current account or accounts (you can connect as many of your current accounts as you want, though you can't connect savings accounts). To do this, you'll be directed to your online bank where you'll be asked to log in and confirm you're happy for Experian to view your transactions. 

Experian says you can withdraw your information at any time if you want to stop using Boost, but it encourages people to stay with the scheme even if you don't immediately see a credit score boost, as you could get a boost later on when its data updates. 

It's worth noting Experian is currently facing enforcement action from the Information Commissioner's Office over its handling of customer data, though the firm has said it's planning to appeal.  

Can other services help boost your credit score?

Experian is not the first company to use Open Banking data to enhance your credit score.

Clearscore can use information about transactions in loan applications with two lenders, Likely Loans and Lendable. This is largely aimed at those with little credit history, but who have paid direct debits, bills and rent from a current account for a number of years. However, unlike Experian Boost, Clearscore says this can have a negative impact too, for example where the data reveals a different income level from the information on the application.

If you rent your home and want your rent payments to count towards your credit score, you can also opt in to the free Rental Exchange Initiative or self-report using services such as CreditLadder or Canopy – though be aware that, again, unlike Boost, signing up for these services could negatively affect your credit file if you don't always pay your rent on time.