Can Utility Bills Hurt My Credit
While Experian Boost won’t use late payments for utility bills, it’s still possible for a delinquent account to damage your credit score.
Specifically, this can happen if the service provider sends the account to collections or charges off the debt. This typically won’t happen after just one missed payment. But if you miss multiple payments or leave a monthly bill unpaid for months, the provider may enlist the help of a debt collector. Leave it long enough, and it may charge off the account instead, assuming you’re not going to pay.
Your payment history is the most important factor in determining credit scores. It makes up 35% of your FICO® Score and is considered extremely influential to your VantageScore. So having a collections account or a charge-off reported to the credit reporting agencies can damage your credit score significantly.
What’s more, the negative tradeline will stay in your credit file with each reporting agency for seven years. And while adding positive payment history can help reduce its impact on your credit score, it can take a long time to recover fully.
Get Credit For Paying Your Utility Bills
Experian , has created a way to get the credit you deserve.
You can improve your credit score by factoring in your on-time utility and cell phone payments. Its called Experian Boost.
Experian recognized that most consumers pay their utility and cell phone bills on time. After all, electricity, water and cell phones are a critical part of our modern life and you dont want to get shut off!
Getting credit for your on-time utility bill payments is easy. Heres how.
How to Improve Your Credit Score with On-Time Utility Bill Payments:
Its free to .
As part of your free Experian membership, you will receive a free credit report and FICO Score immediately.
Link your bank account to Experian Boost and identify your utility accounts. Experian will access your utility and cell phone payment history
Experian will create a payment history from your bank account. Youll verify the data and confirm that you want it added to your credit file.
After you approve adding your electricity and phone payments to your file, you will get an updated FICO score in real time.
How much can Experian Boost impact your credit score? Check out the stories online at #BoostAmerica. Depending on the utility bills you add and your on time payment history, you could improve your score by 2 points to 15 points or more.
our utility bills can help improve your credit score.
How Could It Affect My Chances Of Getting A Loan Or Credit Card
A missed utility bill payment may harm your credit score. This figure is considered by lenders when assessing how risky it would be to lend money to you. The higher your credit score, the easier it is to be approved for the best loans and credit cards.
Remember, each credit reference agency calculates your score using different algorithms. However, serious red flags logged on your credit report, such as defaults and CCJs, are more likely to do serious damage to your credit score.
Some lenders will flat-out refuse to work with applicants who have certain red flags on their credit files. Others will still accept an application, provided the applicants overall credit score is still healthy.
If your credit score is poor, its often recommended to rebuild it before applying for a large loan or credit card.
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Make Timely Utility Payments
Timely payments are the No. 1 factor that goes into calculating your credit score, so the first step toward getting your utility payments to work in your favor is to make sure they are paid on time.
While positive payments on these types of accounts are not automatically reported to credit bureaus, delinquent accounts are, said Griffin. If youre late on a utility, phone and/or cable TV bill, your provider may report late payment information to Experian, and it would show up on your credit report in the form of a collection.
For credit agencies to be notified of your delinquent account, it must be more than 30 days past due, he said. For instance, missing a payment by a few days or a couple weeks may be considered overdue by the provider and result in late fees or penalties, but if a payment is made before the 30-day mark, it should not impact your credit.
However, remember its always best to pay all your bills on or before the due date to be certain it doesnt hurt your 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.
What Kind Of Payments Help You Improve Your Credit Score
If you dont have much of a credit history, an installment loan, which you repay in monthly installments, may be able to help you improve your score. Installment credit includes auto, home, personal, and student loans. That implies, providing you make all of your payments on time, the loan you could take out to buy a car or pay for your education will also help you develop credit. You shouldnt take out a typical loan just to improve your credit, but credit-builder loans work differently and are designed for this reason.
What Could Be Recorded On My Credit File
Its rare for timely utility bill payments to be passed on to credit reference agencies, as utility bill accounts arent regarded as credit accounts.
However, missed payments are more likely to be reported to credit reference agencies. In this case, it would be logged on your credit file for up to seven years.
If your utility provider takes legal action to retrieve money owed to it, this can lead to defaults or county court judgements , which definitely will be logged on your credit file. If you fall into serious debt that results in an individual voluntary arrangement or bankruptcy, this will also be logged.
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How Can I Report My Utilities To The Credit Bureau On My Own
Certain sorts of financial accounts are virtually always reported to credit reporting bureaus automatically. Mortgages, vehicle loans, school loans, personal loans, major credit cards, and most other revolving credit accounts fall under this category. Examining your credit reports will reveal which of your accounts are currently being reported to which credit bureaus. Every 12 months, you are entitled to a free credit report from each of the three credit reporting agencies. You can see all three of your reports for free each week until April 2022, thanks to COVID-19.
If an account isnt mentioned on your credit report, contact the lender and ask them to disclose your account and payment activity to the credit bureaus. Its important to remember that not all creditors report to all three credit bureaus. As a result, the information on each of your three credit reports could be different.
Payment and account information for unconventional accounts will be accepted by credit reporting bureaus. A unconventional account is one that has recurring expenses, such as rent payments. For the information to be accepted by the credit bureaus, it must be reported by an officially registered data furnisher.
How Can A Utility Bill Hurt Credit Scores
Generally speaking, Canadian utility companies do not report a clientâs payment history to the countryâs two major credit bureaus . Of course, if your payment history is not reported to a credit bureau, then thereâs no way utility payments can influence credit scores. However, all bets are off if you stop making timely payments.
If your past due bills start to pile up and it looks like the utility company wonât be able to get the money you owe them, they can decide to send your debt to a collection agency. This is also known as charging off debt. A collection agency is a company that specializes in recouping unpaid debts.
Once a collection agency assumes the debt, they will usually send a record of your account and your history of non payments to Canadaâs credit reporting agencies. That record will then become part of your official credit report and at that point it will start to damage your credit score. Credit reports show any of your accounts that have been sent to collections and whether your amount owing has been paid or unpaid. The longer it takes you to make payments, the longer and more severely your credit rating will be negatively affected.
Not sure what your credit score is?
You can get your credit score FOR FREE by signing up for Borrowell. See how your financial habits are impacting your credit score and get coached on how to improve your score. Signing up only takes 3 minutes.
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Do Utility Bills Affect Your Credit Report
Utility bills arenât something you may think of straight away when you think of things that affect your credit history.
But, despite not strictly being a form of credit like a loan or a credit card, they can be a key piece of information that helps lenders to work out if youâre a good person to lend to or not. How? Read on to find out.
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.
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Learn Why Paying Phone And Utility Bills On Time Is Important To Your Financial Wellbeing
You may know that credit scores are calculated based largely on your past experience with things like loans and credit cards. But according to the Consumer Financial Protection Bureau , paying bills on time for utilities and cellphones could also be a factor.
Those types of bills are whatâs known as alternative data. Rent payments are another example. But alternative data has to be reported to credit bureaus for it to affect your credit. And you have to be responsible in other parts of your financial life, too. Keep reading to learn more about how paying bills could help you build your credit.
Applying For Utility Services Is Applying For Credit
If youre moving into a new home and you need to set up and pay for utilities, youll need to apply for those services. When you apply, companies often look at how youve paid your bills in the past, including how youve paid bills for utilities where youve lived before.
Heres what you should know when you apply for utilities:
- Youre applying for credit. Utility companies send you a bill at the end of the month based on how much gas, water, or electricity you use. That means theyre extending you credit for their services until you pay your bill.
- Companies will look at your credit history. Like other creditors, utility companies will ask for information like your Social Security number so they can check your . A good credit history can make it easier for you to get services. A poor credit history can make it harder.
- How you pay your utility bills can become part of your credit history. If you pay your bills in full and on time, it can help your credit. If you dont, it can hurt your credit. Failing to pay on time can also lead to collections and charge-offs, which can especially damage your credit. Not paying on time also can affect whether you can get other types of credit. Learn more in Understanding Your Credit.
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Good Payment History = Electricity Deposit Waiver
If you are looking to improve your credit score, you may be about to purchase a house or make a move.
If thats the case, heres another way your good utility payment history can help you avoid paying a deposit for your utilities! Its called a Letter of Credit Deposit Waiver.
Since you are researching ways to add your utility payment history to your credit score, its likely you can easily get a letter of credit. Every electricity provider in Texas will waive your electricity deposit if you can show good payment history. Good payment history for electricity means not more than 1 late payments, and no disconnects in a 12 month period.
Due to the risk of fraud or forgery, electricity companies require that the Letter of Credit comes to them directly from your old electricity company. So the next time you move, apply to any electric provider for service. Then get a letter of credit sent over from your old company . Your new company will waive your deposit.
Use Automatic Payments To Avoid Late Fees
Most personal finance experts recommend using automatic payments on your bills so you can avoid late charges. All of us have forgotten to pay utilities a time or two. This often results in a late fee but can result in far worse if you are consistently forgetful.
We highly suggest that you set up automatic payments for all bills you struggle to remember. Automatic withdrawals allow you to set it up and forget about it with the surety of knowing youll never make a late payment again.
Minor changes like this to avoid a late payment can significantly improve your overall finances, enabling you to tackle each issue as it surfaces with minimal stress.
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How Utility Bills Can Damage Your Credit Score
Although weve said that utility bills dont normally affect your credit score, this is actually an oversimplification. The truth is that its possible for utilities to have a negative effect on your score if you fail to pay them.
Although utility companies dont generally furnish information to the credit bureaus, debt collection agencies usually do. Once they receive your debt, theyll probably add a negative mark called a collection account to your credit reports, which can severely damage your credit.
The upshot is that by default, utility bills can hurt your credit if you fail to pay them, but they never help it, even when you pay them on time. This obviously isnt ideal. However, there are ways you can actually improve your credit score by having your utility payments added to your credit reportyou just have to do a little extra work.
Do Utility Payments Affect My Credit Score
Sometimes. Most utility companies will not report your payment history to the three credit bureaus, because you’re paying for services rather than meeting payments on a line of credit. However, utility companies and landlords are very likely to enlist a collections company to chase up any unpaid bills, and collections do get reported to the bureaus. If you are unsure of whether your electricity or gas company reports to the credit bureaus, you can contact them to find out or request a copy of your credit report to see if any recent activity or delinquencies are being posted.
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Service Provider Payment History Checks
Although paying your utility bills may not directly affect your credit score, and hence, your ability to get a loan, those payments can help or hurt you in getting new utility services .
Similar to alternative credit-scoring methods, some utility companies track your history of utility payments to determine whether to you let you sign up for gas, water, or electricity. If you always pay on time, it will be easier to get these services.
If you have a history of paying late, it may be difficult to get service . You may even be denied service. So, depending on what a utility provider evaluates when determining whether to extend service to customers, those utility payments may indeed be important.
Sign Up For A Paid Bill
If you want your utility bills to contribute to more than just your Experian credit score, then you can sign up for a paid bill-reporting service that reports your payments to TransUnion and/or Equifax as well.
Here are some companies that add utility bills to your credit reports:
- LevelCredit: Adds rent, cell phone, electric, gas, and water payments to your credit reports. It reports rent payments to all three credit bureaus, but only reports utility payments to TransUnion.
- eCredable: Adds up to eight utility accounts to your TransUnion credit report.
- SimpleBills: Adds various utility bills to your Equifax credit report and combines all of your utility bills so that you only need to make a single payment.
As mentioned, all of these services cost money, but theyre quite affordable. You can usually get your utilities reported for under $10 per month, and sometimes for substantially less than that .
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