1. Why is credit important?
A good credit score can help you reach your goals, save money, and more. Here are some of the reasons why building credit is important:
- You need good credit to qualify for a mortgage and purchase a home.
- With a higher credit score, you’ll pay less in interest charges on loans and credit cards.
- Landlords and rental companies check applicants’ credit scores to determine whether or not they’ll lease a property.
- Many employers look at a candidate’s credit history before considering them for an open position.
- People with poor or invisible credit pay higher deposits on utilities, phone plans, and more.
2. What is StellarFi?
StellarFi is a revolutionary, but simple, new way to build credit. With StellarFi, you can build credit without the usual downsides that come with other credit-building methods:
- NO minimum score to qualify
- NO interest charges
- NO deposit required
- NO surprise fees
- NO new debt
How StellarFi works
StellarFi is easy to use. You just need a bank account and some monthly bills to get started.
- Sign up as a StellarFi member.
- Link your bank account.
- Add the bills you want to use to build your credit by replacing your current payment method with your StellarFi Virtual Bill Card number.
- StellarFi pays each bill on your behalf when it’s due, and simultaneously withdraws the payment amount from your linked bank account.
With StellarFi, your bills are conveniently automated and paid on time, AND your bills help you build credit.
How StellarFi improves your credit score
StellarFi impacts the important credit factors that contribute to your credit score:
- StellarFi creates a credit account on your credit report, and will report your linked bills as a line of credit.
- StellarFi reports on-time monthly payments to all three credit bureaus, which contributes to your payment history.
- StellarFi optimizes your credit utilization ratio by providing a payment cushion.
- StellarFi can enhance your credit mix by adding a new type of credit account to your credit report.
- As you continue to use StellarFi, the account’s age can also positively influence your score.
Graphic: StellarFi can improve the factors with the greatest impact on your credit score:
Payment History – Credit Utilization – Credit Mix – Credit Age
3. StellarFi Pros and Cons
StellarFi was built for anyone looking to build credit or improve their credit scores.
Here are some of the best reasons to use StellarFi:
- StellarFi can report all your bills as a line of credit, with a $500 limit reported for those on the Lite plan and up to $25,000 for those on the Prime plan.
- People with poor credit or no credit can use StellarFi.
- There’s no credit check or inquiry to get started.
- You don’t need to pay a security deposit.
- You’ll build credit history with all three major credit bureaus: Experian®, TransUnion®, and Equifax®
- You can view and track your credit score and credit report in your member dashboard.
- You can manage monthly bills in one dashboard.
- You can use your StellarFi Virtual Bill Card to link any recurring bills that you normally pay with a credit or debit card.
So, what are the downsides? Here are some examples of 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 or money order.
- You don’t have an SSN or ITIN.
4. How does Experian Boost work?
Experian Boost is a credit builder that helps customers build credit using specific qualifying bills. To use Boost, customers connect their bank and credit card accounts to the platform. Then, Boost will look for qualifying on-time bill payments to add to the user’s Experian credit file.
Users will see changes to any scoring models that use Experian data. A user’s credit file with Equifax® and Transunion® will not be impacted by Experian Boost.
Experian Boost users need to keep their accounts connected to Boost when applying for new credit in order for lenders to see improved credit scores on their Experian report. If a user disconnects their bank or credit card accounts from Experian Boost, their credit scores will be calculated without the information added by Experian Boost.
5. Experian Boost pros and cons
Here are some of the benefits of the Experian Boost:
- Because Experian is responsible for reporting to their own bureau’s credit files, score changes can be immediate. For other products, score increases may take a week or so to be reported.
- Experian Boost is free to use.
- Experian Boost automatically looks for qualifying bill payments to add, so you don’t have to think about which bills might work.
- Experian can backdate some reporting to report prior on-time bill payments
Here are some of the drawbacks of using Experian Boost:
- Boost only adds information to the user’s Experian file, meaning that lenders who use TransUnion® and Equifax® data will not be able to see the score improvements.
- The results can be diluted when lenders use credit scores from all three bureaus to make credit decisions. For example, many mortgage lenders use a scoring model that averages scores from all three bureaus. In this case, it helps to have a higher score through Experian, but the effects will be less impactful when the scores are averaged with other bureaus.
- Boost only works with bills that have at least 3 payments in the last 6 months, including 1 payment within the last 3 months. Any recently added bills, like a new streaming service subscription, won’t work.
- Rent payments must be made to select property management companies or through specific rent payment platforms to be eligible for Boost.
- A person with no credit history at all cannot use Boost. To qualify, you must already have at least one credit account that has been active for at least 6 months and has been reported within the last 6 months.
7. StellarFi vs. Experian Boost: What’s the best way to build credit?
Every individual’s credit and financial situation is different, which means building credit is not a one-size-fits-all scenario.
Experian Boost would be a good choice for those who don’t need to build credit for a lender that will look at data from all three credit bureaus. If your lender uses Experian data exclusively, Boost is a no-brainer as it can impact your credit score quickly and efficiently.
Experian Boost is also a good choice for someone who doesn’t want to pay $4.99/month for credit building, as Boost can be used for free.
On the other hand, StellarFi is the best option for those who want to make a more significant impact by building credit with all three major credit bureaus. Building credit with all three bureaus will have a more dramatic effect on your FICO® scores.
Additionally, the freedom to link a greater variety of bills means you have more chances to turn bills into credit-builders.
StellarFi is also a great solution for those who would like to go beyond credit building, by using the platform to manage their bills and monitor their credit report.
If you have no credit at all, you’ll want to go with StellarFi – Experian Boost requires customers to have at least one active credit account on their credit file.
