Now Netflix Can Boost Your Credit Score

The more a potential lender knows about you, the more comfortable it is letting you borrow money. Traditionally banks have built familiarity based on your history of handling things like credit cards, car loans and mortgages. Now they can also take into account your Netflix subscription.  

Today Experian announced that a consumer’s Netflix payment history can be factored into the Experian Boost alternative credit score calculation. The move is designed to give those with a thin credit file — not enough information to generate a FICO score — an opportunity to qualify for more credit opportunities and better borrowing terms.

Putting Netflix to your lender’s watch list

Alternative credit scores, like Experian Boost and UltraFICO, are designed to provide a more complete picture of a person’s creditworthiness based on additional indicators of sound financial behavior. They incorporate factors that other scoring models don’t — things like your utility payment history and bank account balances.

Both are free opt-in programs best for those who are building credit (young people, students, immigrants) or rebuilding their credit and are so-called “edge” cases, where 10 or 15 extra points on your score means the difference between being approved for a loan or qualifying for better terms. Here’s how they work:

• Experian Boost requires connecting an online bank account or a credit card to Experian so it can grab your utility payment history for the past 24 months. Qualifying utilities include water, electricity, cable, mobile phone, landline and, as of July, Netflix. Only positive payments are considered, and you can pick and choose which utilities to include. Then you decide if you want to add that information to your Experian FICO Score. Experian reports that on average, consumers who used Experian Boost saw a 13-point increase to their score.
• UltraFICO uses your bank transactions to enhance your score. It requires providing FICO with a link to your checking, savings or money market account to pull data. FICO looks at the average account age, balances, overdrafts, recency and frequency of bank transactions and evidence of consistent positive cash on hand. The company reports that 70% of people with zero overdrafts and at least $400 in savings for three months saw their score improve.

>> MORE: HerMoney How-To: Credit Scores Explained

What’s the catch? There are lots of different versions of credit scores. The shortcoming with alternative credit scores and even some mainstream ones is that not all lenders use them, even if you ask them to. While your FICO Score 8 with Experian Boost might be top-notch, it won’t help you get approved for a line of credit if the lender relies on a different scoring model.

3 Easy Ways to Increase Your Credit Score

Letting lenders know about your Netflix payment record can’t hurt. But if you want to look like a good borrowing candidate to all lenders, no matter what credit score they use, here are three things you can do:

1. Be timely: Paying your bills on time will give you the biggest boost — 35% of your credit score is based on your payment history. One late payment can have a huge impact on your score, especially if you’re trying to build back up your credit. 

To do: Set up automatic bill payments so that if a due date slips your mind, it still gets paid on time.

2. Be aware of your credit limits: Just because a lender gives you a $10,000 credit limit doesn’t mean that you should use it. Lenders look at how much you owe compared to how much credit you’ve been extended. This is your credit utilization ratio, and it counts for 30% of your overall credit score. 

To do: Keep the amount you spend on your cards well below the limit. In the scoring world, 50% is very high, 30% within the safety range and 10% or less is fab. 

3. Be patient, be good: Time is the real secret sauce to improving your credit score. The length of your credit history counts for 15% of your overall score. Once you’ve set up your good habits, the best thing you can do is sit back and let time do its thing. 

To do: It’s tempting to fiddle with your credit to inch that score higher. But doing too much — opening new lines of credit, closing old cards and asking too many times for an increased credit line — will do more harm than good. Let your good deeds marinate and over time and you’ll be rewarded with a rising credit score over time. 

Read next:

• How Many Credit Scores Do I Have?
• 4 Easy Hacks to Increase Your Credit Score
• If Your Credit Score Is Under 700, Make These 5 Moves ASAP
• How to Get a Free Credit Report Every Week

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