Comparing StellarFi with Experian Smart Money™: Who Leads the Pack?

Why is credit important?

Your credit score can be the determining factor in whether you’re able to rent a home, get approved for a mortgage, or get a good interest rate on a car loan. Having good credit can save you money in the long run, through access to better interest rates and more favorable borrowing terms. Here are some scenarios in which your credit score makes a difference:

• Without a strong credit score, you may have difficulty getting approved for a mortgage.
• Consumers with higher credit scores pay lower interest rates on loans and credit cards.
• Landlords typically check your credit to determine whether or not to rent a home or business space to you.
• People with poor or invisible credit pay higher deposits on utilities.
• Some employers even check applicants’ credit before proceeding with the hiring process.

What is StellarFi and how can it improve my credit?

StellarFi is a simple but revolutionary way to build credit. With StellarFi, you can build credit without the downsides of other credit-building products and services. Get started with:

• No minimum score 
• No interest expenses
• No deposit needed
• No surprise or hidden fees
• No new debt

How StellarFi works

StellarFi is easy to use. You just need a bank account and monthly household bill payments — like your go-to streaming service, utility bill, and rent — to get started.

These are the steps to start building credit with StellarFi:

1. Sign up as a StellarFi member.
2. Connect your bank account.
3. Link any monthly bills you’d like to use to build your credit by replacing current payment information (like your debit card) with your StellarFi Virtual Bill Pay Card number.
4. These bills will now be paid using your StellarFi Virtual Bill Pay Card.
5. The amount charged to your StellarFi Virtual Bill Pay Card will be simultaneously withdrawn from your connected bank account.

With StellarFi, your bills are automatically paid, and they’ll automatically help you build credit.

How StellarFi improves your credit score

StellarFi affects the credit factors that contribute most significantly to your credit score and builds credit with all major credit bureaus. Here’s how StellarFi works directly on your credit score:

• StellarFi shows up on your Equifax® and Experian® credit reports as a line of credit.
• StellarFi reports on-time monthly payments to the major credit bureaus, improving your payment history.
• StellarFi optimizes your credit utilization ratio by providing a payment cushion — reported as a line of credit on your credit report.
• Because a new account is created on your credit report, StellarFi can enhance your credit mix.
• As you continue to use StellarFi, the account’s age can also contribute to your score.
• StellarFi does not add hard credit inquiries to your report. These can put a dent in your credit score.

StellarFi pros and cons

StellarFi is for anyone looking to build, improve, or maintain their credit scores. Here are some of the best reasons to use StellarFi:

• StellarFi works for every stage in your credit journey. People with poor or no credit, those interested in taking their score from “poor” to “excellent”, and anyone looking to maintain an optimal score will all benefit from using StellarFi.
• StellarFi can report a credit limit up to $25,000.
• There’s no credit check or hard inquiry.
• You don’t need to pay a security deposit.
• You use your existing bank account and build credit with it.
• You’ll build a credit history with the major credit bureaus: Equifax® and Experian®.
• You can manage your monthly bills in one dashboard.
• Access your credit report, current credit score, and advanced credit tools such as personalized score projections.

So, what are the downsides? Here are some situations in which StellarFi may not be a good fit:

• You’re currently in the underwriting, pre-approval, or under-contract phase of buying a home and have been advised against any changes to your credit report.
• You don’t have a bank account.
• You pay all your bills by check, cash, or money order.

How does Experian Smart Money work?

Experian Smart Money works like StellarFi in that you can use it to pay your bills or any merchants which are reported to the major credit bureaus. The Experian Smart Money Debit Card is linked to your Experian Smart Money Checking Account, where you will need to deposit funds in the checking account in order to make your transactions.

To apply for an Experian Smart Money Checking Account, you need to:

1. Enroll in a free Experian membership and open a digital Checking Account.
2. You need to provide some personal information for ID verification like your name, phone number, address, and email ID.
3. The account is FDIC-insured (up to $250,000) and your money is held in a pooled account at their banking partner, CFSB.

After opening your Checking Account, you will get a virtual Experian Smart Money Debit Card. To use the Debit Card:

1. Deposit money into your checking account and add your digital wallet. 
2. You can start using it immediately with the tap-to-pay feature.
3. You can also request for a free, optional physical debit card once you deposit money into your account.
4. You can either set up a direct deposit, transfer from other accounts, or deposit cash at popular retailers like CVS Pharmacy and Walmart.

Experian Smart Money pros and cons

Here are some of the benefits of using Experian Smart Money:

• It is not a new credit card, so there won’t be any hard inquiries into your credit files that impact your credit score negatively.
• There are no monthly fees or minimum balance fees to set up an Experian Smart Money Checking Account.
• The checking account is secure and FDIC-insured up to $250,000.
• Monthly on-time payments build a positive payment history which is reflected in your credit report.
• You can also use the Experian Smart Money Debit Card to withdraw cash for free at any of their 55,000 fee-free ATMs with the Allpoint ATM network. 
• Since the account is automatically linked to Experian Boost, you don’t have to worry about which regular payments are eligible to be reported to the credit bureaus.
• You can also earn a $50 bonus if you set up direct deposits that make up at least $1,000 within 45 days. The bonus will be deposited into your account within 10 business days once earned. 
• You can also get your paychecks two days early depending on when the direct deposit file is received.

Here are some of the drawbacks of using Experian Smart Money:

• Experian is the only credit bureau that is impacted through Experian Boost linked to your Experian Smart Money Checking Account and Debit Card (which is linked to Experian Boost). Not all lenders use Experian credit reports and not all of them use scores impacted by Experian Boost.
• You need to open a checking account to qualify for the debit card. This adds to the number of financial accounts you may already be keeping track of. 
• It only impacts FICO 8 scores which many lenders and credit card companies may not consider.
• Your Experian Smart Money Debit card is only linked to the Experian Smart Money Checking Account. You will need to bank with them in order to use the card.
• To qualify for the $50 bonus, you need to have direct deposits of $1,000 in 45 days. This may not be possible for someone new to credit building and people with low income and high expenses.
• Getting your paycheck early through direct deposits is also not guaranteed as it may vary from deposit to deposit. There may be daily deposit limits.

StellarFi vs. Experian Smart Money: What’s the best way to build credit?

Your credit history and credit needs are unique. Finding the right solution is not a one-size-fits-all scenario. That’s why it’s important to take an objective look at your options.

Experian Smart Money is a good fit for anyone with no or low credit scores. You don’t need to take on new debt to improve your credit score and use the bills you’re already paying to build it. Plus, the Experian Boost link means that you don’t have to worry about which of your payments qualify to be reported to the credit bureau. 

However, not all lenders use Experian credit files, Experian impacts only FICO Score 8. So any lender not reporting to Experian or using FICO Score 8 will not see any change in the borrower’s credit score. Though the $50 bonus with no additional hidden monthly or maintenance fees looks attractive, terms like having $1,000 deposits within 45 days to qualify render the benefit meaningless, if the user cannot make direct deposits of that amount. The promise of getting your paycheck two days earlier is also not guaranteed. So if you are new to credit building, or you’ve only recently landed a job and started saving up, it may not be possible for you to meet these requirements unless you have other sources of income like an inheritance.

The StellarFi Virtual Bill Pay Card is the best option for people across their credit journey, whether you’re building from having low credit or want to boost yourself from “average” to “good.” This is a great fit if you want to make a more significant, long-term impact on your credit by paying the big and small monthly bills you’re already in charge of. The StellarFi Virtual Bill Pay Card also reports up to $25,000 of bill payments whereas the Experian Smart Money limit is not specified. Since the Experian Smart Money feature is not a new line of credit, it does not impact your credit mix in any way, unlike StellarFi that adds to your credit mix because it reports as a line of credit. Those with mostly installment accounts on their credit report will see an improved credit mix when they join StellarFi. It’s also a great solution for those who want to manage their bills and view their credit scores and reports in one dashboard. 

By comparing credit builders side-by-side, you’re sure to find the right tool, or combination of tools, for your goals.