You Probably Already Know That Paying Bills On Time Can Be Key To Avoiding Late Fees Higher Interest Charges Or Unpaid Bills Going To Collections But Theres Another Big Reason To Try To Ensure Youre Never Late And If It Happens Often It Can Hurt Your Payment History A Lot
Lenders want to know you have a history of honoring financial commitments, says Nancy Bistritz-Balkan, vice president of consumer education and advocacy at Equifax, one of the three major credit bureaus. Thats why payment history is so crucial to your ;and why payments made more than 30 days late can have such a negative impact on your credit health.
Your FICO® and VantageScore® are two common credit scores lenders can use when looking to assess your financial track record. Both weigh payment history heavily among many factors affecting your credit scores. In fact, payment history accounts for about 35% of your FICO® ;Score. Similarly, VantageScore Solutions considers your payment history extremely influential.
Your credit scores can make or break your chances of getting a cellphone contract, a mortgage, a credit card, a car loan or other kinds of credit, so that makes the payment history on your credit reports a pretty big deal.
Cell Phones And Scores
Although not all the credit bureaus use the same formula to come up with the number, they typically use several key factors to determine a score. These include paying bills on time, the average length of time you’ve had your loans, the types of loans you have, how much you owe, and how many new credit lines you have. Cell phones services do not count as lines of credit or loans — and paying your cell phone bill on time won’t raise your score because cell phone providers don’t report that information to the credit bureaus.
Lots Of Negative Little Positive
When you enter into a cell phone contract or monthly plan, you enter into a debtor-creditor relationship with the cell phone company. Some cell phone companies report your monthly payment activity to the companies that maintain the credit report information, but others do not, according to Carrie Davis of SpendonLife.com. For those that don’t report regular activity, the only time your cell phone payments get reported are when you are late paying a bill.
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Bottom Line: Protecting Your Payment History Can Protect Your Credit
Building a strong payment history, which can help tell lenders and others that you pay your bills on time, is likely to boost your credit. Late payments can hurt your payment history by pushing your credit scores down and making you look like a higher-risk borrower.
If you pay your bills on time, you can build a positive payment history on your credit reports and could increase your chances of getting credit when you need it.
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Cell Phone Providers Will Check Your Credit History
The first thing to keep in mind is that cell phone companies will always check your credit history before approving your application for finance. This is because youre essentially taking out a loan with the provider, and as such, theyll want to be confident that youre not a credit risk and can keep up with your repayments. This means theyll run a credit check on your profile to ascertain your eligibility, and much like with all other hard inquiries, therell be a temporary dip to your credit score as a result. However, the effect on your overall profile should be negligible, and the inquiry will fall off your report after two years. That’s about the length of time you’ll have a smartphone handset, however.
Yet this also means that your credit score needs to be high enough in order to be approved for cell phone finance each provider will have different criteria so theres no set minimum score, though if youve got bad credit youll find it harder to be accepted. And if youre refused credit altogether, this can also show up on your report. If you think your score could do with being taken up a notch or two, it could be worth checking out the best credit repair services before you apply for your new contract. ;
Why Have I Been Refused Credit
There are a number of potential reasons for this:
If you have missed any payments – this could have made a mark on your credit report and make you look unreliable to a potential lender. This could be anything from a loan or credit card repayment, mobile phone contract or missing a mortgage payment.
;You are not registered on your local electoral roll
You have financial ties to someone with a bad credit history
You have a lot of potential credit a lender will also take into account how many bank accounts you have and how much debt you currently hold or credit you could use.;;
You may also be victim of not even having a credit history – good or bad or of identity fraud.
;Many young people struggle to get their first credit card as lenders do not have a financial history to compare.
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Uh Oh Your Cell Phone Bill Is Now On Your Credit Report
GeneralGraham Reimer 22 Aug
I hope your day is going great!
I have some news that I wanted to send out that may interest you and affect your credit score. The credit agency Equifax Canada, is now reporting your cell phone payment on your credit bureau. This is a brand new action by Equifax and if you have a cell phone bill that comes monthly, this will affect your credit score. The Transunion Credit Bureau, which is another company, has been doing this for a while but most banks do not use them for reference. They rely heavily on Equifax, which is why this new change is big news for everyone. Here is how it affects you
The good news about this: This will help you build your credit score without having to go into debt! This is great news for those looking to start their credit score or rebuild their score. Simply pay your cell phone bill and your score will start to increase. This is considered a tradeline by banks. Keep in mind most banks like to see 2 tradelines when lending mortgages.
The bad news: If you are late on your cell phone bill, it will show up on the Equifax report, and therefore lower your credit score. In other words, pay it on time, everytime.
Thanks for letting me steal some time out of your day to pass on this news.
Have a good one.
What Is Alternative About Cell Phone Data
We are often struck by how much credit misinformation circulates in Canada, based on U.S.-focused media reports. If you find yourself reading information online after an unintentional Internet border crossing, you may see that cell phone data is sometimes called alternative data in credit score lingo. Heres why: one of the key differences between the Canadian and American credit ecosystems is that American cell phone providers do not generally report customers account data to U.S. credit bureaus. Some U.S.-based reports about credit scores are emerging, which reference the use of alternative data such as cell phone records pulled from sources other than credit bureaus. For what its worth, cell phone data is not considered alternative in Canada since it is already reported to Canadian credit bureaus.
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Other Accounts Included In A Credit Report
Your mobile phone and internet provider may report your accounts to your credit bureau. They can appear in your credit report, even though they arent credit accounts.
Your mortgage information and your mortgage payment history may also appear in your credit report. The credit bureaus decides if they use this information when they determine your credit score
A home equity line of credit that is added to your mortgage may be treated as part of your mortgage in your credit report. If your HELOC is a separate account from your mortgage, it is reported separately.
Myth #: Checking Your Credit Score Will Negatively Affect It
This ones tricky! According to Equifax, While pulling your own credit report does result in a soft inquiry on your credit reports, it will not affect your credit scores. In fact, knowing what information is in your credit reports and checking them regularly may help you get in the habit of monitoring your financial accounts. On the other hand, hard inquiries do affect a credit score. The Equifax website says, When a lender or company makes a request to review your credit reports as part of the loan application process, that request is recorded on your credit reports as a hard inquiry, and it usually will impact your credit scores. The reason for this is that the credit bureaus regard multiple credit inquiries in a short period of time as increasing the likelihood that a borrower is carrying a lot of debt. Borrowers who carry a lot of debt are seen as risky in terms of their ability to repay the debt. Credit bureaus identify those potentially risky borrowers by lowering their credit score. Having said that, most people can have their credit report pulled three or four times per year without negatively affecting their credit score. An exception to the above practice is when you are shopping around for a major purchase like a car or mortgage. Again, according to Equifax, multiple inquires for the same purpose within a certain period of time are generally counted as one inquiry.
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Start A New Credit History
One strategy some people use to improve their payment history is to take out a credit card that is easier to qualify for, like a gas station or store card, and consistently pay off the balance each month. The good behavior can slowly put you in a better financial position. But be careful this strategy doesn’t backfire on you: you don’t want to take out new cards if you think you will be tempted to rack up more debt.
Can A Credit Repair Company Fix My Score
There are companies that say they can clean up your report for a fee, of course. You now know how to approach this legally on your own and for free. But folks are drawn to these credit repair companies by the promise of getting information collection accounts removed from their reports.
First of all, if anyone guarantees they can get the item removed, run for the hills. Im serious. There are many scammers in this field.
For instance, one of the strategies is to dispute everything;even if its accurate. You might get lucky if the original lender doesnt respond to the bureaus investigation. At this point, the bureau has to remove the negative line item.
But really, if you owe them money and the details are accurate, the honorable thing to do is to pay the bill. And as already noted, you can ask that the lender show that your account was paid in full.
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When Late Payments Become Collections
Even if your payments arent usually reported, a creditor might turn you over to collections if you fall behind on your bills. Those collections accounts might be reported, which is a negative record in your credit history.
This is true even for bills that arent usually reported at all, such as medical bills, utility payments or insurance payments. If you owe any business money and dont pay it, a creditor might write it off as bad debt and send your account to collections. The collections company will then report it on your credit report.
Does Purchasing And Then Paying Off Debt Increase A Credit Score
Cell phones and smart phones are so common today many people feel like they’re almost physically dependent on them. When you get a phone, your phone provider usually looks at your credit score to determine if you’re a good enough risk to qualify for one. Unfortunately, paying your cell phone bill doesn’t mean your credit score will increase. In most cases, your cell phone payments don’t have an effect on your credit score at all — unless you can’t pay.
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Financial Information In Your Credit Report
Your credit report may contain:
- non-sufficient funds payments, or bad cheques
- chequing and savings accounts closed for cause due to money owing or fraud committed
- bankruptcy or a court decision against you that relates to credit
- debts sent to collection agencies
- inquiries from lenders and others who have requested your credit report in the past three years
- registered items, such as a car lien, that allows the lender to seize it if you don’t pay
- remarks including consumer statements, fraud alerts and identity verification alerts
Your credit report contains factual information about your credit cards and loans, such as:
- when you opened your account
- how much you owe
- if your debt has been transferred to a collection agency
- if you go over your credit limit
- personal information that is available in public records, such as a bankruptcy
Your credit report can also include chequing and savings accounts that are closed for cause. These include accounts closed due to money owing or fraud committed by the account holder.
Cell Phone Debt Collection: Know The Statute Of Limitations
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Were you contacted for payment of an old phone bill? If your phone bill is two years or older, your debt is past the statute of limitations meaning you can no longer be legally sued for payment on the debt.
That doesnt mean youre entirely in the clear, however. Debt collectors may still try to pressure you for payment. Heres what to know about the statute of limitations on phone bill debt and how to act if youre being asked to pay for an old phone bill.
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Who Can See And Use Your Credit Report
Those allowed to see your credit report include:
- banks, credit unions and other financial institutions
- offer you a promotion
- offer you a credit increase
A lender or other organization may ask to check your credit or pull your report”. When they do so, they are asking to access your credit report at the credit bureau. This results in an inquiry in your credit report.
Lenders may be concerned if there are too many credit checks, or inquiries in your credit report.
It can seem like you’re:
- urgently seeking credit
- trying to live beyond your means
Dispute The Collection If You Found An Error
If the goodwill letter falls flat and the debt collection remains on your credit report, its time for a more advanced method.
For this, you will need a current copy of your credit report. TransUnion, Experian, and Equifax provide you with a free credit report once a year.
Once you have your credit reports in hand , find the negative item youd like removed and check it out closely.
Confirm all the details and if you see anything inaccurate, report the inaccurate information to the major credit reporting agencies.
The Fair Credit Reporting Act or FCRA requires credit reporting agencies to show only accurate information in your credit history.
If you can find inaccurate information, the credit bureau will have to fix the information. Though, if it cant fix the errors, the bureau should remove the collections from your credit report.
This method can work because, rather than simply disputing the entire entry, you are going to write an advanced dispute letter that lists especially what is inaccurate.
Using this letter, you will insist that each piece of information is corrected or that the collection be removed.
This makes it more difficult for the credit agencies to verify the collection and hopefully result in them simply removing the collection altogether.
ITEMS ON THE COLLECTION ENTRY TO CHECK FOR INACCURACIES:
- Anything else that appears to be inaccurate
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