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Is Experian Boost Worth It?

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The Experian Boost™ program started in December 2018. Since its debut, it has helped millions of consumers increase their credit score. Some see substantial increases, but others only see their scores go up by a few points. It’s hard to tell how much it will help you, which often has people wondering if it’s worth signing up.

Experian Boost™ is a free product from the well-known credit bureau. It’s meant to help consumers who don’t have a strong credit report. It’s most useful for people who don’t own credit cards or have just graduated and haven’t had time to build a credit history. According to Experian, the Boost program has helped 1 out of 10 people increase to a higher FICO credit level. Almost 8 out of 10 people with bad credit saw their score increase. It’s helped people with no credit history get a score.

How Does Experian Boost Work?

It’s important to understand what Experian Boost™ does. Your FICO score is used by lenders and credit card companies to decide if you’re a good risk or not. When you apply for a loan, a mortgage, or a new credit card, the financial institution pulls up your credit history to see how well you manage your debt. Most use FICO, which gives you a rating based on these criteria:

  • Payment History (35% of your score) – How many late payments or missed payments do you have? Make your payments on time to avoid losing any points in this part of the scoring process.
  • Credit Utilization (30% of your score) – What are your spending habits? Ideally, you do not want to use more than 30% of your available credit. So if you have a credit card with a $2,000 credit limit, you want to keep the balance under $600.
  • Credit History (15% of your score) – How long have you had your credit card and loan accounts? If you have had the accounts a long time, that should benefit your credit score. If you’re the type to apply for a credit card and cancel it a few months later when an introductory APR may have ended, it can count against you. A credit history of several years is better.
  • Credit Mix (10% of your score) – What types of credit do you have? It’s best to have a mix of products like credit cards, a car loan, a mortgage, and student loans.
  • New Credit (10% of your score) – Each time you apply for a new credit card or loan, a hard pull of your credit report is ordered. One or two may not impact your credit, but more than that might. According to FICO, each hard pull can lower your score by as much as five points. If you apply for four new credit cards after being denied the first time, you could see your score drop by 20 points.

FICO looks at payments you make on loans (car, mortgage, home equity, personal, and student) and credit cards. It never looks at the other payments you make each month to streaming services (Disney+, Hulu, Netflix, etc.), telecom (house phone or cellular phone services), or utility (electricity and water) bills. Experian Boost changes that.

The Experian Boost™ program scans the payments you’ve made in the past 24 months. It only takes payments you approve that were taken from your checking account. It takes your positive payment history for things like your electricity, your Netflix subscription, and mobile phone service and adds it to your FICO score. On-time payments help increase the Payment History part of your score. You’re not in danger of it lowering your score if you miss a payment. Experian Boost only records on-time payments.

The other thing to realize is that Experian Boost only raises your FICO score through their system. The score increase will not carry over to the other credit bureaus (Equifax and TransUnion). If your lender or credit card company pulls the score through TransUnion, your former score is what the company or lender sees.

How Much Has It Helped Raise Scores?

How much Experian Boost™ may help your score depends on your history or lack thereof. You must have been paying the bill using your checking account for a minimum of three months. Longer is better.

When a consumer from South Lake Tahoe, California, added phone and utility bills, the FICO score only increased by one point. It wasn’t much of a difference.

A consumer from Arizona signed up and saw the FICO score jump by seven points, which moved him from having Fair Credit to Good Credit. It wasn’t a large jump, but moving to a new credit level improves the chances of getting lower interest rates and saving money.

Others have seen substantial increases. A consumer from Oakland, California, went from having Poor Credit to Fair Credit after Boost increased the FICO score by 50 points.

How about my own experience? I have a 30-year history with credit cards, car loans, and mortgage companies. I didn’t expect it to go up much. Instead, a family friend with no credit history other than college loans agreed to try it. His score increased by 27 points by looking at payments for his cellphone.

Is It Safe?

You may not feel comfortable sharing your checking account number with Experian. While they can only read your account information, sharing this type of information always comes with a risk. Breaches can hit any company at any time and put your information at risk.

There is a way around this. You could set up a free checking account with Experian Boost. When you need to pay a bill, transfer enough money to cover that bill. Experian sees your positive payment history but isn’t connected to the checking account you use most often.

Is It Worth It?

Is the Experian Boost™ program worth your time? What’s important to know is that Experian Boost is free. Link your checking account to Experian and it gets to work increasing your score. It only pulls the payments made on time, and it ignores payments that were made late or skipped. There’s no way for Boost to cause your score to drop. The only way your score will go down is if you cancel the program, and even then, you’re only returning to the score you had before the program took effect.

If you have a car loan, mortgage, and credit cards, Experian Boost™ isn’t likely to help much. If you use your PayPal or other third-party processors to pay your streaming, telecom, or utility bills, it cannot track those payments. If you use a credit card to pay your bills, it’s also not going to help. You have to have a checking account and use that account to pay your bills.

It’s designed to help people with no credit history or bad credit. If you don’t fall into those categories, it’s unlikely to raise your score by much. Still, it’s free. You can try it out and see if it makes a difference and cancel if it doesn’t.

As it’s free, it is very well worth a shot. It may not help a lot, but even a jump of a few points is better than nothing. Cancel with ease if you don’t feel it raised your score enough. Experian Boost is risk-free and well worth your time simply to see if it can help.

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom



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Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

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The government’s incentive to step in and bail out depositors when banks fail is clear from past experience.

By Anusha Chari & Amiyatosh Purnanandam

The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.

The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.

A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.

A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.

Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.

India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.

The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!

A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.

India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.

In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.

Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.

Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan

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5 Signs You’re Not Ready to Own a Home, According to a CFP

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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet. 

Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up. 

I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse

It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy. 

1. You have credit card debt

Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress. 

Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home. 

To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards. 

There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.  

2. You have bad credit

Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to

mortgage lenders
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home. 

Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home. 

Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future. 

3. You don’t have an emergency fund (or an inadequate one)

If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.

Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there. 

4. You don’t have separate savings for your home

I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt. 

When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value. 

Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership. 

5. You have a low savings rate

It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save. 

If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget. 

Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor. 

Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.

Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.

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