Experian Boost, a new tool that can help you instantly raise your credit score, was released this month. We explore how it works and how it could help you get approved for finance.
Unlocking the Credit-Boosting Potential of Your Netflix Habit
In the UK, where 27. A million households use streaming services, and one of the most popular questions these days is whether credit can be established through monthly subscriptions. There are ways to use your recurring payments to raise your credit score, even though the response isn’t as straightforward as yes or no.
The Power of On-Time Payments
Subscriptions are essentially recurring bills, and on-time payments are crucial for building a positive credit history. When you consistently pay your Netflix Spotify or other subscription bills on time, it demonstrates responsible financial behavior to credit bureaus. This can lead to a gradual increase in your credit score, making it easier to secure loans, mortgages, and other forms of credit in the future.
The Experian Boost Advantage
Experian Boost is a free service that allows you to add your on-time subscription payments to your credit report. This can significantly boost your score, especially if you have limited credit history or a low score.
The Three-Step Credit-Building Hack
Here’s a simple hack to optimize your subscriptions for credit building:
- Add Your Credit Card as the Payment Method: Go to your Netflix or other subscription service settings and switch the payment method to your credit card.
- Set Up Automatic Payments: Ensure your credit card balance is automatically paid in full each month. This eliminates the risk of late payments and ensures consistent on-time payments.
- Maintain Sufficient Funds: Always have enough funds in your bank account to cover the automatic credit card payment. This prevents any potential hiccups that could lead to missed payments.
Remember:
- Building credit with subscriptions requires responsible financial management. Late payments can negatively impact your score.
- This hack works for various recurring bills, not just subscriptions. Consider adding your utility bills, phone bills, and other regular payments to your credit report through Experian Boost.
- While subscriptions can contribute to credit building, they shouldn’t be your sole focus. A healthy credit mix, including loans and credit cards, is ideal for a strong credit score.
Disclaimer:
This information is intended for general knowledge and should not be considered professional financial advice. Always consult with qualified professionals for personalized guidance regarding your specific financial situation.
Could your credit score go down?
Experian guarantees that using Experian Boost won’t lower your credit score—rather, it will either rise or remain the same.
What is Experian Boost and how does it work?
Payments for savings, council tax, and entertainment subscriptions have historically not raised your credit score or been recorded on your credit report. This is because theyâre not classed as forms of borrowing. For instance, you can typically pay for Netflix and Spotify subscriptions on a pay-as-you-go basis rather than committing to a credit agreement.
One survey carried out by Kantar found that 56% of UK households had a least one subscription video on demand during lockdown (with the likes of Netflix and Amazon). While millions of Brits make these kinds of payments on time every month, their credit scores are not seeing the benefit.
So Experian has created Experian Boost to help people bulk out their credit history by taking these unreported bills into consideration. It works by connecting to your current account via Opening Banking – with your permission (no banking login details are needed). Then it scans your payment history to see how well you manage your finances, based on your income and outgoings over the previous 12 months.
Your credit score on your Experian credit report could increase by as much as 66 points if you have been paying your bills on time.
Read more about Open Banking and how it works.
How To Build Your Credit Score With Subscriptions | Pave UK
FAQ
Do monthly subscriptions improve credit score?
Do monthly payments help build credit?
Can I build credit with subscription?
Do recurring payments build credit?
Do monthly subscriptions build credit?
And while that’s great news for Netflix, Hulu, Disney+, and Spotify, the costs add up. With convenient payment options and recurring charges, it’s easy to set it and forget it, but consumers are paying an estimated $219 per month in subscription fees. So, if you’ve been wondering if your monthly subscriptions build credit, the answer is yes.
What types of subscriptions help build credit?
Subscriptions that may help build your credit include streaming services (think Netflix ® and Hulu ®) and other recurring payments to applications on your phone (think Headspace ® or Spotify ® ).
Why do I need a credit card for my subscriptions?
This helps to build your credit score. While using a credit card specifically for your subscriptions can help improve your payment history, you can also use automatic enrollment/payments if you don’t want to worry about making this payment on time each month.
How much does a monthly subscription affect my credit score?
It’s an essential part of calculating your credit score. It accounts for about 20% of your VantageScore ® and 30% of your FICO ® score. If you’re looking to lower your credit utilization by paying less towards your monthly subscriptions, you can unsubscribe from services you don’t use as often (or can live without).