Free program can help raise credit scores for some

Q. I have seen a lot of TV commercials for Experian Boost, which claims it can raise most people’s FICO credit scores for free. How does it work? Are the program’s claims legitimate?

A. Yes, the program and its claims appear to be legit. I recently spent about 10 minutes online to sign up for the plan and instantly raised my FICO score by 15 points.

Boost was launched last year by Experian, one of the nation’s three big credit bureaus. It’s a free program that allows consumers to add additional data to their credit file in order to raise their FICO score, the primary scoring system used by about 90 percent of lenders when evaluating a potential borrower’s application for a new mortgage or other type of credit.

There’s not enough room in this column to provide all of the details of Boost, but it’s primarily designed to help people who regularly pay their cellphone bills and utility expenses through their checking account rather than with a credit card. Until now, such payments that are made by check or debit card haven’t been automatically tracked by credit bureaus, while those that are put on a conventional credit card are reported monthly as part of the card’s overall payment activity.

To sign up, visit experian.com/boost and provide some basic information to create a free account. You then enter the bank account that you use to pay your cellphone charges, utilities or both.

Experian will then begin regularly monitoring the account to ensure that those bills are being paid on a timely basis. The company emphasizes that its access to your account is on a read-only basis, meaning that it can only view monthly activity but does not have access to the funds to pay past-due bills or to use for any other purpose.

The Boost program only reports positive bill-paying activity from your checking account to Experian, meaning that negative information won’t be recorded and lower your FICO score. Experian’s website claims that Boost’s 1.3-million-plus users have seen their score immediately jump an average of 13 points.

Despite its potential benefits, the plan has a few shortcomings.

Consumers who may benefit most are those who have what industry insiders call a thin credit profile. They include younger people who are in the early stages of establishing a history of on-time debt payments and people of all ages who pay some or all of their cellphone and utility bills by check or debit card that (unlike monthly creditcard bills) previously weren’t recorded by the nation’s credit bureaus.

Conversely, consumers with more extensive, excellent credit histories might not see any major improvement to their score or might not qualify for Boost at all.

Also realize that Experian Boost only affects the FICO score that you get from

Experian itself. Even if you get the average 13-point increase that the company claims, it probably won’t improve your chances of obtaining a new mortgage or other credit if the bank you choose uses a different bureau to gauge your creditworthiness.

REAL ESTATE TRIVIA

Though the Federal Reserve recently cut borrowing rates for banks to almost nothing, many lenders are still charging 4 percent or more for new 30-year mortgages to either pad their profits or simply trim their backlog of applications from homeowners who want to refinance.

Q. I made a full-price offer for a home, but the sellers’ agent sent me a letter stating that they had rejected my offer but would agree to a sale if I paid $5,000 more than their original offering price. Aren’t they legally required to sell the house to me because I offered to pay the original asking price in full?

A. Sorry, but no.

An offering price, sometimes called an asking or listing price, is simply an offer by a homeowner to sell a property for a certain amount of money.

However, real estate laws in all 50 states don’t obligate the seller to honor the offering price, or even to accept a bid that exceeds it.

Because the rejection was put into writing, the sellers’ request for an additional $5,000 constitutes a legal counteroffer and renders your original full-price bid null and void. If you don’t want to pay the extra money, you can simply walk away from any further negotiations, get your deposit back and look for another home.

Q. I am a homeowner and a rentalproperty investor, and I love watching Judge Judy on TV every day because she always seems to be ruling on some interesting real estate cases. But is she a real judge or just a really good actress?

A. Judith Susan Sheindlin graduated from the New York Law School in 1965 and quickly became a corporate lawyer.

She earned a position as a prosecuting attorney for New York City in 1972 and, barely 10 years later, was appointed as a judge by then Mayor Ed Koch in 1982.

She retired from the public court system in 1996 to pursue her budding career as a book author and television personality.

Sheindlin earns $47 million a year, according to Forbes Magazine, and has amassed a net worth of about $440 million. Remarkably, she and her production staff shoot all 260 episodes that air each year over the course of only 50 days.

Send questions to David Myers, P.O. Box 4405, Culver City, CA 90231, and we’ll try to respond in a future column.