A big credit reporting bureau is taking another step to allow people with scant or marred credit histories to improve their odds of getting loans and credit cards.

Experian, one of the three major credit bureaus, said last week that in January it will start Experian Boost, a free, optional service that lets consumers supplement their credit report with information about their history of paying utility, cable and cellphone bills.

The extra information may help improve consumer credit scores, the three-digit numbers that lenders use to decide whether borrowers are likely to repay loans.

Traditional credit reports include your history of paying credit card bills and loans but typically don’t include data on these kinds of bills unless the accounts are delinquent.

The new service aims to reward consumers who pay those bills on time, said Gregory Wright, chief product officer with Experian’s consumer bureau.

The service could potentially benefit millions of consumers who have “thin” credit files — meaning they have few credit card or loan accounts on their reports — or are considered “subprime” borrowers, with scores too low to meet many lenders’ requirements.

There’s a catch or two: You must have an online bank account and give Experian an electronic peek at it. Experian will work with Finicity, a financial technology firm, to scan bank statements and identify eligible payments. The system uses read-only access, so it cannot alter a user’s data. “Data security is our No. 1 priority,” Wright said.

Consumers must give Experian explicit permission to identify eligible bills and add them to their credit report and can revoke it at any time. Only positive payment history is included, he said.

Experian found that adding the additional bill-payment information helps increase a user’s credit score about two-thirds of the time, Wright said; in about a third of cases, it has no effect. (Rarely, the extra information may lower a score slightly; in that case, a consumer could just cancel access to the service, he said.)

One drawback is that borrowers generally don’t know in advance whether a specific lender or credit card company uses Experian to evaluate credit scores; lenders may also check an applicant’s credit using Experian’s main competitors, Equifax and TransUnion.

If a lender doesn’t use Experian, it can’t obtain the consumer’s Boost score.

As the product develops, Experian may invite participants to apply for credit cards or loans that use Experian and can see their Boost data, Wright said.

Consumer advocates are cautiously optimistic about the potential of using consumer-selected information to broaden the availability of credit.

Chi Chi Wu, a lawyer with the National Consumer Law Center, said the center opposed mandatory reporting of utility payment data to credit bureaus because it could hurt low-income customers who may miss payments during financial hardships. But, she said, because consumers must opt in to Boost, there is less risk of the data backfiring; it’s likely that only those who pay their bills on time will use the product.

Whether the new service catches on remains to be seen. Consumers have become increasingly concerned about the security of their personal information, particularly after Equifax’s major data breach last year.

“Given the credit bureaus’ past issues with the accuracy and security of data, we are watching them closely as they experiment with new business models that give them access to more personal information,” said Mike Litt, consumer campaign director for U.S. PIRG, a nonprofit consumer advocacy group.

Here are some questions and answers about credit scores:

Q: Who is most likely to benefit from Experian Boost?

A: Consumers with credit files reflecting fewer than five accounts, and with scores between 580 and 669, will be likely to benefit the most, Experian said. (Basic FICO scores range from 300 to 850, with scores above 670 considered good. The average FICO score is now 704.


Q: Can I use Experian Boost if I pay my bills with traditional paper checks?

A: Currently, no; the system cannot scan check images for keywords to identify them as eligible payments. “We will continue to explore new and innovative ways to capture additional payment history as we go,” Wright said.


Q: How can I improve my credit score without granting access to my bank account?

A: The best way to reliably increase your credit score is to avoid borrowing the maximum amount available on your credit cards and to consistently pay your bills on time, credit experts say.


Ann Carrns writes for the New York Times.