Does Empower Help Your Credit Score?

Empower is a financial technology platform designed to help individuals manage their financial lives. It offers tools and services to provide a comprehensive view of a user’s financial standing, including credit. This article explores Empower’s functionalities and their potential relationship with a user’s credit profile.

Empower’s Core Financial Management Features

Empower offers financial management tools to help users gain control over their money. A central feature aggregates all linked financial accounts, providing a consolidated view of a user’s net worth, including assets and liabilities. This overview allows users to track their financial progress.

The platform provides budgeting and spending tracking. Users can automatically categorize transactions to monitor spending. They can set monthly spending limits and view summaries by category, helping them adhere to financial plans. This insight supports informed financial decisions.

Beyond budgeting, Empower includes tools for savings goal management, such as AutoSave, to automate transfers for savings targets. It also offers debt payment tracking to monitor debt reduction. These features foster improved financial habits by providing clarity and organization.

How Financial Habits Influence Credit Scores

A credit score assesses an individual’s creditworthiness based on financial behaviors. Payment history is a significant factor. On-time payments across all credit obligations demonstrate reliability and positively impact the score. Conversely, late or missed payments can reduce the score.

The amounts owed, or credit utilization, also play a role. Maintaining a low credit utilization ratio, ideally below 30%, indicates responsible credit management and contributes favorably to a credit score. High utilization can suggest an over-reliance on borrowed funds, which may negatively affect the score.

The length of an individual’s credit history also contributes. A longer history with positive account activity reflects stability in managing credit. Credit mix, the variety of credit accounts held (e.g., credit cards, installment loans, mortgages), also influences the score. Demonstrating the ability to handle different types of credit responsibly can be beneficial. New credit applications and recently opened accounts can temporarily impact a score, as they may indicate a higher risk to lenders.

Empower’s Direct Credit-Related Offerings

Empower provides services that directly interact with an individual’s credit profile. One offering is the Empower Thrive Line of Credit, designed to help users build credit history. This line of credit reports payment activity to the three major credit bureaus: Equifax, Experian, and TransUnion. Timely repayments on the Thrive Line of Credit can improve a credit score.

Empower also offers a cash advance feature, providing short-term funds without a credit check. Repayment activity for these cash advances is generally not reported to credit bureaus. This means using the cash advance does not directly build credit history or typically harm a credit score through direct reporting. However, if a cash advance goes unpaid and is sent to collections, this could indirectly impact a user’s credit score if the collection agency reports the debt.

Empower also provides credit monitoring services. This allows users to track their credit score and view influencing factors. While credit monitoring helps users stay informed about their credit health, it does not directly build or improve a credit score. Some credit card offerings under the Empower brand, such as the former Petal cards now rebranded as Tilt cards, also report payment history to credit bureaus, providing another avenue for users to build credit.