On credit-building and building better financial habits: A closer look at Experian’s new checking account

Americans racked up more than $1 trillion of credit card debt in the second quarter, followed by the resumption of federal student loan payments at the end of the third quarter in September. As a result, consumers have fallen into a quagmire of confusion – challenged with balancing their finances and paying down debt. All of this is impacting their credit health.

Experian launched the Experian Smart Money Digital Checking Account and debit card to help alleviate some of this burden and improve access to credit-building solutions. 

Consumers can enroll in a free or paid Experian membership to open an Experian Smart Money Digital Checking Account. From there, they can access other features and tools including Experian Boost, a FICO score-boosting feature that is embedded in the digital checking account. 

There are no monthly fees or minimum balances on the account. Consumers who set up direct deposit can get their paycheck up to two days early and a bonus of $50. Additionally, consumers will receive a virtual debit card that they can add to their digital wallets and can also request a physical card after funding their account. 

The key feature of the new checking account

Launched in 2019, Experian Boost is a free feature within the Experian membership product that allows consumers to contribute positive payments for eligible bills such as utilities and residential rent to their Experian credit files – to potentially increase their credit scores. The process allows consumers to connect their existing bank account and credit cards to Experian Boost and permits Experian to identify relevant payments for reporting. Once consumers opt-in to add the eligible payments to their Experian credit file, Experian Boost will continue to monitor the account for payments made. Consumers have control to remove or add accounts at any given time.

Experian Boost is specifically embedded in the new checking account with a focus on the consumer segment just starting out on their financial wellness journey, those who already have a credit profile and are looking to build their credit history and increase their credit scores, or Gen Z, who are new to building their creditworthiness.

Account holders who make at least three eligible monthly bill payments with their Experian Smart Money Digital Checking Account are eligible to raise their FICO score through Experian Boost, free of charge. 

More than 14 million consumers are already connected to Experian Boost via their existing external checking account or credit card. However, now they have the option to consolidate and pay all their eligible bills from a single checking account.

“We’ve made it convenient to pay Experian Boost-eligible bills from one account and have those positive payments reflected so potentially more consumers can reach their fullest financial potential,” Jeff Softley, group president of Experian consumer services at Experian, told Tearsheet.

A little budgeting never hurt anyone

While good credit fends off a blemished credit score or limited access to credit, it also provides the freedom to qualify for financial products at better rates.

“Credit is sometimes necessary to allow consumers to achieve their financial goals such as purchasing a home or attending a university, but it is a tool to be used wisely and responsibly,” said Softley.

Although Experian’s new account offering aims to provide consumers with a way to build credit without accumulating debt to improve their deteriorating financial health, more can be done in this regard, according to Softley.

He believes financial literacy can play a critical role in avoiding making poor financial decisions. Learning the various forms credit can take and how credit choices are relevant to each individual’s life are some of the insights that can drive sound financial decisions. Understanding key spheres of financial literacy – earning, spending, saving and investing, and having a budget in place – can help consumers live and spend within their means, an important life skill.

“With a budget in place, they [consumers] are less likely to use credit without a plan and can avoid taking on unmanageable debt,” added Softley.