The single most crucial action you can take to raise your credit score is to make sure you pay your bills on time. Your chances of being eligible for the best products at the lowest prices increase with your score.
Not all bills, however, will affect your credit score. That can only be accomplished by monthly payments that are recorded with the three national credit bureaus (TransUnion, Equifax, and Experian). Your credit score is generally affected by the payments you make on your mortgage, credit card, and automobile, but not by bills that charge you for utilities or other services.
You’d think paying your rent on time would boost your credit score. However, historically, timely rent payments haven’t been recorded with the three credit bureaus and haven’t affected your credit score.
This is starting to change. Rent payments will now be included in your credit reports by Equifax, Experian, and TransUnion; however, it is your landlord’s or property management company’s responsibility to report those payments to the credit bureaus. If they choose not to, your rental payments will continue to have no effect on your score. Experian advises you to find out if your landlord or property management business reports rent payments to the bureaus. If they don’t, you can register for a service that will (usually at a cost), like RentTrack or PayYourRent.
In today’s world, maintaining a good credit score is crucial for accessing various financial products and services. It plays a significant role in determining your eligibility for loans, credit cards, and even insurance policies. While many factors contribute to your credit score, one of the most important is your payment history. This includes not only your credit card and loan payments but also other bills you pay regularly.
Which Bills Affect Your Credit Score?
Traditionally, only bills related to consumer debt, such as credit card payments and installment loans, were reported to credit bureaus and impacted your credit score However, recent changes have expanded the scope of bills that can influence your credit score
Bills That Affect Your Credit Score:
- Consumer Debt:
- Credit card payments
- Installment loans (e.g., auto loans, student loans, mortgages)
- Unpaid Bills in Collections:
- Any unpaid bills, including utilities, medical bills, and rent, can be sent to collections and negatively impact your credit score.
- Experian Boost:
- Experian Boost allows you to add eligible recurring payments, such as rent, utilities, and phone bills, to your Experian credit report, potentially boosting your credit score.
Bills That Do Not Affect Your Credit Score:
- Utility Bills:
- Utility companies typically do not report payment history to credit bureaus. However, Experian Boost can help you include on-time utility payments in your credit report.
- Cable, Internet, and Phone Bills:
- Similar to utility bills, these payments are not usually reported to credit bureaus.
- Insurance Payments:
- Insurance payments, including health, car, and homeowners insurance, do not typically affect your credit score.
How to Get Credit for Your Bills
Experian Boost:
- Experian Boost is a free service that allows you to add your on-time payments for eligible recurring bills to your Experian credit report. This can potentially improve your credit score, especially if you have a limited credit history.
Automatic Bill Payments:
- Setting up automatic bill payments can help you avoid late payments, which can negatively impact your credit score.
Additional Tips:
- Pay your bills on time, every time.
- Keep your credit utilization ratio low (ideally below 30%).
- Avoid opening too many new credit accounts in a short period.
- Monitor your credit reports regularly for errors or inaccuracies.
While not all bills directly affect your credit score, it’s crucial to pay them on time to avoid negative consequences. Additionally, services like Experian Boost can help you get credit for your on-time payments, potentially boosting your credit score. By understanding which bills affect your credit score and taking steps to manage them effectively, you can build a strong credit history and improve your financial well-being.
Utility, cable, internet and phone bills
Generally speaking, paying your phone, cable, and internet bills as well as your utility bills won’t raise your credit score. That’s because these types of companies typically don’t report payments to the credit bureaus.
But this, too, is starting to change. Through a connection to your online bank accounts, Experian Boost, a relatively new service, adds your utility and telecom payments to your credit report.
Remember: You shouldn’t treat a bill lightly just because it doesn’t directly affect your credit score. Miss too many payments, and your creditor could send your account to a collection agency. Having an account in collections will show up on your credit report and lower your credit score. Furthermore, a collection notice stays on your credit reports for seven years even after you pay off the debt.
Since life, auto, renters, homeowners, and health insurance payments are normally not reported to the credit bureaus, making late payments can negatively impact your score; however, timely payments have no effect.
You do not want to fall behind on insurance payments. You might experience financial hardship if your insurers cancel your policy because of mishaps or medical expenses. If your home is destroyed by fire, you might have to incur debt to replace electronics, clothes, and furniture if you don’t have insurance.
The payments you make on your vehicles are reported to the three credit bureaus. If you pay these on time every month, your credit score will get a boost. If you’re late? Even one missed payment can cause a high credit score to drop by triple-digit points.
A late payment on your auto loan remains on your credit report for seven years. This means lenders see that missed payment whenever you apply for a loan. This could result in a rejection or higher interest rates.
Fortunately, a payment cannot be officially marked as late to credit bureaus until it is past due by at least 30 days. Therefore, if you’re only two weeks behind on your car payment, catch up on it right away to avoid damaging your credit.
Your monthly mortgage payment is another important bill to always pay on time. First of all, it affects your credit score significantly and is reported to the credit bureaus. More importantly, your lender may start foreclosure proceedings if you fall too far behind on your payments, which could ultimately result in the loss of your house. Foreclosures will remain on your credit report for seven years and will cause your credit score to plummet.
Your credit score may be significantly impacted by the payments you make on your credit cards, which are also reported to credit bureaus. Additionally, keep in mind that if you pay your credit card bill late, your provider may penalize you and possibly impose a high penalty interest rate, which can quickly mount up on any outstanding balance.
New changes for medical debt could help your credit score
FAQ
Do utility bills affect your credit score?
Does paying bills improve credit score?
How much does an unpaid bill affect my credit score?
Why does my credit score go down when I pay my bills?
Which bills affect my credit score?
Only bills that are reported to the three national credit bureaus will affect your credit score. That includes your car, mortgage and credit card payments.
Does paying bills on time help a credit score?
According to a **NerdWallet** article, payments that don’t go on your credit reports can’t help your credit, but failing to pay may hurt it . However, timely payments of your cellphone bills (and
Do unpaid bills affect your credit score?
Collections can include any unpaid bills, not just those related to loans or credit, and, as you’d expect, they tend to hurt your credit scores. Now, you can also include eligible non-credit monthly bill payments, such as utilities, rent and insurance, on your Experian credit report to help your credit scores based on Experian data.
Will medical bills affect my credit score?
It’s easy to assume medical bills will not impact your credit score since most healthcare providers don’t report payments to credit bureaus. But if you have any outstanding medical debt that recently went to collections, your healthcare provider will likely sell your debt to a collection agency.