Are Utility Bills Included In Your Credit Report
Utility bills do not usually show up on credit reports. Most utility companies do not report your payment activity to any credit bureaus. Hence, your on-time payments for utilities do nothing for your payment history in most instances.
Even though this can be disappointing for people who hoped utility bill payments could be a way in which they build credit, it does mean that one or two late payments wont tarnish your credit history. Missing multiple payments or getting behind enough on your bills that they are sent into collections is a different story altogether.
If you get far enough behind your utility and telecom bills phone bills, electric bills, or gas bills where the utility company has no choice but to open a collections account to retrieve the debt you owe, that collection account will be reported to the three major credit bureaus, likely damaging your credit score substantially.
Why Does This Matter
- Establish a credit score for 10% of consumers who dont have a score because of a thin credit file
- Increase the credit score of 75% of people with a FICO® score currently under 680
- Move 5% to 15% of consumers into a higher credit score range
This evolution is raising concerns that adding data that can increase consumers credit scores could cause problems down the road if subprime borrowers get access to more credit. But Jeff Softley, chief revenue officer for Experian Consumer Services, told The Wall Street Journal that the bureau has tested the Experian Boost model and found it accurately predicts risks. And he said the tool is about access to credit not expansion of credit.
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What Is Included In Your Credit Report
Your credit report includes four categories of information. This information is reported directly to the credit bureaus that compile your report. Credit reports can be requested by lenders, employers, leasing agents, and landlords to determine eligibility for a loan, a job, or a lease.
The four informational categories included on credit reports are as follows:
Personally Identifiable Information
This category is not used to calculate your FICO score but rather to match your report to you through identifiable information. The information here includes your name, address, Social Security Number, date of birth, and employment information that you have provided in previous loan or credit applications.
All accounts, whether loans or lines of credit, reported by a lender are included in this category. The information will consist of the type of account, the date the account was opened, the loan amount or credit limit, the balance on the account, and your payment history. This information has the most significant impact on the calculation of your FICO score.
Every time you apply for a loan or a new credit card, you are authorizing the lender to request a copy of your credit report from a credit bureau. When this happens, it will show up as a hard inquiry within this section or your personal credit report.
Public Record and Collections
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Tips For Building Your Credit
Paying your bills on time is one of the best ways to build credit for the future. But if you have a thin credit fileif you have a shorter credit historyor you have bad credit from past mistakes, there are other options. Here are a few tips for building your credit:
- Sign up for tools like Build It. Get the positive payment history youre achieving with utility bills and rent added to your credit profile.
- Apply for a . These are available for those with poor or no credit. Theyre often secured by a savings account. Once you pay off the loan, you get access to the savings account and the money in it.
- Apply for a secure credit card. These require a deposit to secure your original line of credit, but many secure credit card accounts are reported to all three credit bureaus. Thats because theyre specifically designed to help you build or rebuild credit.
Can I Improve Credit Score With Utility Bill
Credit scores can be improved in many ways, but paying utility bills on time is usually not enough to make a meaningful difference. While gas, electric, and water are common utility bills that people pay, the information is not reported to the credit agencies and does not appear on an individual’s . On the other hand, loans and credit cards, including repayment history, are substantially more influential in determining an individual’s credit score.
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Can You Remove A Utility Bill In Collections
An account in collections will disappear from your credit report seven years after the delinquency date of the account.
The delinquency date is the date when you first failed to pay the bill. So long as you never brought the account back into good standing, the account falls off your credit report seven years from that date.
You can also negotiate what is known as a pay-for-delete when you talk to the collections agency.
Tell the agency that youll pay what you owe, but only if it removes the collections report from your credit report.
Many will be willing to do this, and it will have a big impact on your credit score.
You Can Build Your Credititll Just Take Time
Does paying bills build credit? Yes, but it depends on which bills youre dealing with and the policies of the lender or provider. It also depends on whether youre paying those bills on time. Understanding what bills help build credit gives you a leg up on personal finances, but its important to pay all your bills on time regardless.
Also remember that building your credit is completely doable, but it might take some time. Be patientpay your bills on time and in the meantime, try a few other methods to bump up your credit.
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Does Paying Your Utility Bills Affect Your Credit Score
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability.
Your credit score tells potential creditors how likely you are to pay your debts on time. You might assume that all the bills you pay matter in calculating your credit score: after all, why shouldnt on-time payments of rent or utility bills be an indication of reliability? That might be a reasonable assumption, but it wouldnt be correct. On-time payments of most bills will not affect your credit score.
Understanding how your credit score is generated will help you to understand why your bill payments dont help your credit score, and why failing to pay your bills could hurt it.
How Can A Utility Bill Hurt Your Credit
Utility companies do not report accounts and payment history to the three major credit bureaus , and as a result, these types of bills have not historically had an impact on your credit scores. For a utility company to be able to report information to a credit bureau, they must meet the requirements of the Fair Credit Reporting Act, such as updating payment information regularly and being able to respond to disputes within legally mandated timeframes.
One of the few instances where your utility and telecom billsincluding energy, phone and cablewill affect your credit score is if you miss enough payments that the provider sends your debt to a collection agency or charges off your account, assuming you’re not going to pay it.
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Ensure That Utilities Help Your Credit
Utility inquiries are only soft inquiries, so they won’t hurt your credit. And if you opt in to Experian Boost, your utilities can even help your credit scores.
If you’re late on a utility payment or your account has already been sent to collections, try to get caught up on payments or pay off the collections account as quickly as possible. Then work to maintain a positive payment history going forward.
To get a better understanding of where your credit stands, order a free credit report. While a delinquent account can remain on your credit report for seven years, new positive credit activity can reduce its impact over time.
Want to instantly increase your credit score? Experian Boost® helps by giving you credit for the utility and mobile phone bills you’re already paying. Until now, those payments did not positively impact your scores.
This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.
Can Utility Bills Affect Your Credit Expert Insight
The credit score…40% of Americans have no idea how it works or how credit is determined! Luckily we are here to help with this simple guide! One of the biggest factors that play a role in your credit score is unpaid or late utility bills.
We are going to give you an expert’s insight on understanding unpaid utility bills’ effect on your credit. So, before you let your credit score drop any lower…Let’s get started!
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How To Boost Your Credit Score With Utility Bill Payments
Although many utility companies don’t report your bill payment activity to the three major credit reporting agencies, you still might be able to boost your credit if you’ve got a solid history of paying utility bills.
Experian Boost®ø helps consumers instantly improve their FICO® Score by giving them credit for on-time payments for utility services, telecom services and certain streaming services. This free feature can benefit people with little to no credit history as well as people seeking to bump up their credit scores.
To take advantage of Experian Boost, you’ll give Experian permission to access your account payment information, verify monthly utility payments and confirm that you want them to show up on your credit report. If the new information can raise your credit score, the boost will happen right away. Experian Boost doesn’t include late utility payments in its calculations.
Do Bills Affect Your Credit Score
In general, the bills that factor into your credit score are for your credit cards and loan payments. Other bill paymentsincluding rent, cell phone plans, utilities or medical billsare not typically included in your score.
Remember, your credit score is calculated with a scoring system like FICO® or VantageScore. These models look at all of the accounts listed on your credit reports to assign a score, which signals to lenders how risky it is to offer you new credit, like a credit card or a loan.
These scoring models can only work with information accessible on your credit reports, which are maintained by three bureausTransUnion®, Experian® and Equifax®. The three credit bureaus simply report the information that is provided to them by lenders.
Since utility companies, apartment complexes, cell phone companies and other businesses dont generally report information about account balances and payments to the credit bureaus, those bills generally arent included in your credit score calculation.
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Should I Pay Utilities With A Credit Card
Yes. However, your utility company may charge a fee if you want to process payments on a credit card. It’s a nice feeling to know that all of your bills are being paid on time, because you’ve set them up to be paid off by your credit card every month. But beware of any hidden costs. Some utility companies will charge a fee for processing the payment on a credit card, and you’ll be paying extra in interest if you don’t pay off your credit card balance in full every month.
You may want to use a debit card instead to automate your monthly bills. Paying utilities with a debit card are not typically charged an extra processing fee. Just be sure to have enough funds in your checking account to meet those payments on their due dates.
An easy way to make sure you have enough money in your account is for you to budget bills in advance and move your bills closer to your payday.
Why You Should Pay All Of Your Bills On Time
Before you get too excited about the possibility of some late bills being under the radar, I urge you to remember that your score is a reflection of your financial life based on your payment history. So, if your financial life is going through a crisis, expect that your credit report and score will eventually begin to show signs of that. Trying to cover it up by robbing Peter to pay Paul wont work for long unless you make whatever changes are necessary in your life to actually pay all your bills on time.
At the risk of repeating myself, the most important thing you can do for your credit score and your overall financial health is to pay your bills as agreed, on time, every time. So, while not all bills count the same in scoring terms, they do in your nonscoring, real-time, flesh-and-blood life.
Remember that even bills that arent typically reported to the bureaus may do so if you are very late or become delinquent. The key thing to remember is that bad behavior will likely hurt your credit score quickly, while good behavior may not do much for your score in the short term.
Utility bills are a prime example paying your electric bill or cable bill on time ensures that your TV has power and you can watch your favorite series, but most providers dont report your on-time payments to the credit bureaus.
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Payments Not Always Reported To Credit Bureaus
Other types of payments may or may not be reported to the credit bureaus. That includes regular payments you make for rent, insurance or services such as utilities, cellphones, internet or cable.
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For most of these companies, the default is not to report your payments to credit bureaus. However, you can invest in a service such as Build Itavailable through ExtraCreditthat helps ensure your on-time payments for utilities and rent can be added to your report and potentially positively impact your credit score.
Build It works by adding new tradelines for these accounts on your credit reports. Then, as you pay on-time each month, those payments are reported. This can be a good way to demonstrate your positive payment history even if you dont have a lot of credit accounts.
Utility Bills In Collections
According to the NCLC, there are an estimated seventy million Americans with some form of debt in collections. Missing your payment due date by one or two days is not likely to affect your credit score. However, if you are more than thirty days late on your payment, your utility provider will most likely send your bill to a collection agency.
Once the collection agency receives your debt, they will report it to the major credit bureaus until it has been resolved. Even after a debt has been resolved, it can take time for your credit score to recover. Additionally, if a debt goes unresolved legal action can be taken to settle the debt.
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How Long Do You Have To Keep Your Utility Bills
If you are claiming a loss because of bad debt deductions or losses on securities, then you need to keep your tax records around for seven years. Utility Bills: Utility bills still need to be saved for a while, but you do not have to save them as long as you do for other items. In most cases, you only have to keep your utility bills for one year.
Get Current On Bills That Affect Your Credit Score
Your credit primarily depends on your history of making on-time payments on credit cards and loans. If youre behind on these payments, get caught up to improve your credit. Granted, that may be easier said than done. If youre struggling with debts, contact your lenders and ask if there are any programs available to help you get back on track. Being proactive may open doors you didn’t know existed.
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Utility Payment May Impact Your Future Ability To Open Utility Accounts
Although utility payments dont direct affect your credit score, your payments history will affect your ability to open electricity, water, or gas accounts. This is so because some utility providers track your past payment history.
If you have a spotty payment history for your utility accounts, some utility providers will not allow you to sign up for a utility account without first making a deposit or entering into an agreement where a third party makes your utility payments in the even that you fail to make the payments.
On the other hand, if you have always made your utility payments on time, you will have an easier time signing up for utility accounts. Some utility providers will even be willing to waive fees and deposits on your account if you have an excellent history of making your utility payments on time.