Do Utility Bills Affect Your Credit Score?
Utility bills, like electricity, water, gas, and internet, are usually not reported to credit bureaus. This means that paying these bills on time typically does not affect your credit score directly. However, if you miss payments or your account is sent to collections, this negative information can be reported to the credit bureaus and harm your credit score.
How to Make Utility Bills Count Toward Your Credit
If you want your utility payments to positively impact your credit score, there are a few steps you can take:
- Check with Your Utility Providers: Ask your utility companies if they report your payment history to credit bureaus. Most utility companies do not do this automatically, but some may offer this service.
- Use a Third-Party Service: Consider using a service like Experian Boost or other credit-building tools. These services allow you to self-report utility payments to credit bureaus, which can help build your credit score by showing consistent, on-time payments.
- Set Up Automatic Payments: To avoid missed payments, consider setting up automatic payments for your utility bills. This ensures you never miss a payment, which is crucial for maintaining a positive credit history.
Can Paying Bills with a Credit Card Help Build Credit?
Paying utility bills with a credit card can help build your credit if managed correctly. Here’s how:
- Consistent Payments: Using a credit card for utility payments can help you build credit if you pay off your balance on time each month. This shows responsible credit usage, which is a key factor in credit scoring.
- Credit Utilization: Be mindful of your credit utilization ratio—the percentage of your available credit that you are using. Keeping this ratio low (generally below 30%) is important for maintaining a healthy credit score.
Related post: What is Pay As You Go Electricity?
Potential Risks of Paying Utility Bills with a Credit Card
While paying utilities with a credit card can be convenient and potentially beneficial for your credit score, there are risks:
- Interest Rates: If you do not pay off your credit card balance in full each month, you may accrue interest charges, which can negate any potential credit score benefits.
- Credit Card Fees: Some utility companies may charge a fee for credit card payments. Make sure to check if any additional fees apply.
What Happens If You Don’t Pay Utility Bills?
If you fail to pay your utility bills, the consequences can go beyond just having your services disconnected. Here’s how non-payment can affect your credit:
- Negative Reporting: If your utility account goes into collections, the collection agency can report this to the credit bureaus, which can significantly lower your credit score.
- Long-Term Impact: A collection account can remain on your credit report for up to seven years, affecting your ability to get loans, credit cards, and even housing.
Related Post: How to Weatherize Your Home to Save Energy
Do Paying Utilities Build Credit FAQ
Q: Do all utility companies report to credit bureaus?
A: No, not all utility companies report payment history to credit bureaus. Some may report only if your account goes into arrears or collections, while others may not report at all. It’s essential to check with your specific utility providers to understand their reporting policies.
Q: Can late utility payments hurt my credit score?
A: Yes, late utility payments can potentially harm your credit score. Utility companies have the authority to report delinquent accounts to credit bureaus, resulting in a negative mark on your credit report.
Q: How can I find out if my utility company reports to credit bureaus?
A: You can find out by contacting your utility provider directly and asking about their reporting policies. Inquire whether they report both positive and negative payment history or only negative instances.
Q: Should I pay my utility bills with a credit card?
A: Paying utility bills with a credit card can be convenient and help build credit if you consistently pay off your credit card balance on time. However, be mindful of your credit utilization ratio, as high credit card balances can negatively impact your credit score.
Q: What should I do if I find an error in my utility bill reporting on my credit report?
A: If you find an error, you should promptly dispute it with the credit bureau reporting the inaccurate information. They will investigate the dispute and make corrections if necessary.
Do you Need Cheaper Electricity?
If you’ve taken the time to understand the information on your bill and discovered you’re paying more than you’d like for your electricity, have you looked around for a cheaper deal? The Energy Professor has a wealth of information on ways to save on your utilities, including details of top deals that could significantly reduce your monthly or quarterly electricity bills.
We hope you found this article helpful! If you are looking for ways to increase energy efficiency and sustainability in your home be sure to take a look at all of the latest renewable energy options in your area. The Energy Professor helps residential and small business owners find qualified energy suppliers in New York, New Jersey, Pennsylvania, Texas, Ohio, Maryland, Illinois, and Massachusetts.
