How Netflix can improve your credit score
The world of credit ratings is changing – dramatically – and giving your credit report a boost has never been so enjoyable! While it is possible to get a debt consolidation loan with bad credit, improving your credit score is always a good first port of call. Let’s take a look at how you can transform your love of music and box set binges into an instant increase in your credit score.
Experian Leads The Way
Credit ratings agency, Experian, are leading the way in terms of modernising the process used to create credit reports. With November 2020’s launch of Experian Boost, you can now count on more types of payments to boost your credit score than ever before – and this could even help you to get approval for finance in the future.
Experian Boost In a Nutshell
In the past, not all payments you have made count towards improving your credit score. Monthly payments, like unsecured personal loans or credit card repayments, will have helped to improve your score if you were paying on time and the full monthly amount. However, other payments, like Council Tax, savings and subscriptions, won’t have made any difference to your credit score. This might make uncomfortable reading, especially if you’ve made a real point of always paying on time and in full. The good news is that things are changing.
From November 2020, payments for subscription for services, like Netflix and Spotify, can count towards your credit score.
Why is this new?
Typically, payments that don’t come with a credit agreement won’t count towards your credit report – they’re not considered to be a form of borrowing. Subscriptions, like Amazon Prime, Spotify and Netflix, do go out of your account every month, but you can stop them at any time and you sign up on a pay-as-you-go basis, whether you pay monthly or annually.
Market research brand, Kantar, carried out a survey that showed that over half of UK households subscribe to at least one entertainment streaming subscription service during the Coronavirus lockdown. That’s over 1 in every 2 households across the UK. With millions of people making payments on time and in full every month, this good financial behaviour was not represented on their credit records.
Experian Boost was created by Experian to help people harness their good financial activity and see it reflected on their credit score, pushing up their rating and making it more likely for them to be approved for loans and finance in the future.
How does Experian Boost work and how can I get it?
It’s pretty straightforward. Simply connect to your current account through the open banking platform. Open Banking means that you can share more of your good financial data with lenders and businesses, but you get to decide who you share what with. If you share your current account with Experian, via Open Banking, your banking history will be scanned to see just how well you’re doing with your money management over the last 12 months. Payments in and out will be taken into account, with bills paid on time and in full rewarded with points on your credit score – good bill payment could generate up to 66 points straight away.
Anyone can sign up to Experian Boost. It’s free and, to access it, you just have to create an Experian account or log in to your Experian account if you already have one. You can always change your mind and withdraw permission for access to your banking records at any time in the future. Experian promise that your credit score will only either increase or stay as it is. Users of Experian Boost won’t see their report negatively impacted by sharing their banking data.
What is Experian?
Experian is a credit reference agency. In the UK, there are three main credit reference agencies – Equifax, Experian and TransUnion – and each have their own credit scoring system. This means that you will have three different credit scores, depending which agency you ask. Experian’s credit score runs from 0-999, with a good score hitting anywhere between 881 and 960. It’s these credit scores and rating agencies that lenders turn to when they’re assessing your credit applications. A good score can secure you more favourable terms and lower interest rates so it can pay – quite literally – to work on your credit score.
Is there a catch?
Experian Boost can help you to increase your score, but lenders can still see your score before using Experian Boost. The difference is that they’ll be seeing a more realistic picture of the payments that you are making. Experian Boost is being used by some lenders and your credit report is only part of what they base their decision on. Lenders might consider that you have too many subscriptions but – as with all financial products, loans and considerations – balance is everything.
Experian Boost might just be what you need to improve your credit score and to add a bit more bulk to your score, taking all your best financial information into account. It could just be the reason you’ve been looking for to Netflix’n’Chill.