You probably know that skipping bill payments can drop your credit score. The reverse is also true—paying your bills on time can positively impact your credit. But that’s only true when creditors or others report to the credit bureaus. Find out what bills help build your credit—or potentially harm your credit—below.
Hey there, credit enthusiasts! Ever wondered which bills can actually help you build a stellar credit score? Well wonder no more! In this comprehensive guide we’ll delve deep into the world of credit-building bills, revealing the secrets to unlocking a higher credit score and a brighter financial future.
But first, let’s address the elephant in the room: not all bills are created equal when it comes to credit building. While paying your bills on time is always a good practice, only certain bills get reported to the credit bureaus, which ultimately determine your credit score.
So which bills are the credit-building superstars? Let’s break it down:
The Usual Suspects:
- Rent payments: Thanks to innovative platforms like Avail, renters can now report their on-time rent payments to credit bureaus, giving them a chance to boost their credit score. Services like CreditBoost can report these payments to TransUnion and Experian, contributing to your FICO XD score, which considers utility payments.
- Utility bills: While utility companies don’t typically report payments to credit bureaus, platforms like Experian Boost™ allow you to report your utility bills, phone bills, and even popular streaming services for free. This can give your credit score a significant boost, especially when combined with CreditBoost.
- Auto loan payments: Auto loans can be a double-edged sword for your credit score. Making on-time payments can significantly improve your score, while late or missed payments can drag it down. Remember, auto loan payments are automatically reported to credit bureaus, so consistency is key.
- Student loan payments: With millions of Americans carrying student loan debt, it’s crucial to understand their impact on your credit score. Both public and private student loans need to be handled carefully to avoid negative marks on your credit report. Making on-time payments is essential, and if you’re facing financial challenges, explore payment options with your loan provider.
- Credit card payments: Credit cards can be a powerful tool for building credit, but they can also be a double-edged sword. Applying for new credit cards can lead to “hard inquiries,” which can temporarily lower your score. Overspending can also hurt your score, as it indicates a potential risk of default. However, maintaining a low credit utilization rate (using a small portion of your available credit) can significantly boost your score over time. Remember, even one missed credit card payment can drastically decrease your score within 30 days. Use credit cards responsibly to reap their benefits without jeopardizing your credit score.
The Hidden Players:
- Medical bills: While medical bills typically don’t get reported to credit bureaus, unpaid bills sent to collections can severely impact your credit score. These negative marks can stay on your credit report for up to seven years. The good news is that you can remove these negative marks, but it takes time. Always negotiate your bill or start a payment plan with your medical provider to avoid collection agencies and their detrimental impact on your credit score.
The Importance of Payment History:
Your payment history is the single most important factor credit lenders and landlords consider when evaluating your creditworthiness A consistent history of on-time payments demonstrates your reliability and increases your chances of getting approved for new lines of credit or a new apartment
Understanding the Credit Scoring System:
FICO® and VantageScore are the two major credit scoring models used by lenders and landlords. While they consider slightly different criteria, both models heavily emphasize payment history as the most crucial factor.
FICO® Scoring:
- Payment history (35%)
- Credit utilization (30%)
- Account age (15%)
- Inquiries/new accounts (10%)
- Credit mix (10%)
VantageScore:
- Payment history
- Age and type of credit
- Credit utilization
- Size of balances
- Inquiries/new accounts
- Amount of available credit
Regardless of the scoring model, your payment history plays a pivotal role in determining your creditworthiness. Making on-time payments across all your bills is the key to building a strong credit history and unlocking a brighter financial future.
Report Rent Payments with Avail:
Now that you know which bills can help build credit, it’s time to take action! As a renter, your largest monthly expense is likely your rent. Why not leverage this expense to boost your credit score?
Create an account or log in to Avail today and invite your landlord to start reporting your on-time rent payments through CreditBoost. Once your landlord sets up your account, you can start contributing to your FICO 9, FICO XD, and VantageScore credit scores, all in one place.
Remember, building credit takes time and consistent effort. By understanding which bills can help you build credit and making on-time payments, you’re taking a significant step towards achieving your financial goals.
So, what are you waiting for? Start building your credit today!
Payments That Don’t Ever Make it To Your Credit Report
Generally speaking, accounts that you owe for municipal fees like parking tickets and library fines don’t appear on your credit report. Neither do tax liens or civil court liens.
Note that this wasn’t always the case. The credit bureaus changed this policy in 2017 and 2018. They could always make adjustments to reflect updated laws, regulations, or business and consumer credit requirements, adding specific items back to credit reports.
Another type of payment that doesn’t usually get reported on your credit profile is medical bills. Your doctors’ offices or hospital typically aren’t bothering to make this kind of report.
Reporting Only Late Payments
Some lenders and service providers only report to the credit bureaus if you’re late with your payments. This depends on the creditor’s policy, so ask about it when you set up new accounts. It’s important to understand if your payments will improve your credit or not, unless you fall behind.
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FAQ
What utility bills build credit?
What payments help build credit?
What bills go to credit score?
Does paying utility bills help build credit?
Paying your monthly utility bills — water, gas, trash, electric, cable and internet — can help you build your credit if those payments are paid on time as agreed and are reported to the credit bureaus.
Can paying bills help build credit?
Keep reading to learn how. Paying utilities, rent and cell phone bills can help build credit if they’re reported to the credit bureaus. If certain bills aren’t reported to the credit bureaus, you can consider using a third-party service to report your payments.
Can recurring Bills improve credit score?
Timely payments of your cellphone bills (and other recurring expenses) can help you build your credit scores, thanks to the Experian Boost feature. Automatic bill payments can help you avoid late fees and promote credit score improvement by preventing late or missed payments. Utility companies don’t share payment history with the credit bureaus.
How do I build my credit?
Here are a few tips for building your credit: Sign up for tools like Build It. Get the positive payment history you’re achieving with utility bills and rent added to your credit profile. Apply for a credit builder loan. These are available for those with poor or no credit. They’re often secured by a savings account.