Do utility bills affect credit score

do utility bills affect credit score

Obtaining a pristine credit score is a goal sought after by most responsible adults. A good credit score can open up so many opportunities that have the potential to enrich the financial lives of Americans. Unfortunately, it’s not always the most straightforward feat to accomplish. 

In most cases, one builds credit by taking out loans (installment loans or otherwise) or lines of credit and repaying them through monthly payments. All on-time payments and late payments are reported to the three major credit bureaus to show up on your payment history. 

Lending products have the potential to either help or harm your credit history. Still, you might be wondering whether other bills get reported on your credit file as well, bills like rent payments or utility payments. 

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. 

Credit Accounts

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. 

Credit Inquiries

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

Lastly, credit reporting agencies collect public records from state and county courts, most notably bankruptcy records. Additionally, any unpaid debts far past due that have been handed off to a collection agency and reported to the credit bureaus by debt collectors will be included here. 

How Your Credit Score Is Calculated

Credit scores are not explicitly stated on your credit report, contrary to popular belief. Your credit score is calculated from the information provided on your credit report. Simply checking your credit score is not as comprehensive but can give you a good general idea of your eligibility for certain financial products.

Credit scores are calculated through a formula of five categories making up different percentages: 

  • 35% – Payment History
  • 30% – Amounts Owed
  • 15% – Length of Credit History
  • 10% – New Credit
  • 10% – Credit Mix

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 won’t 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.

How Utility Bills Might Still Affect Your Credit

Utility companies don’t usually report accounts or the utility payments made on those accounts to credit reporting agencies. However, there are a few exceptions wherein your bills might still affect your credit score. 

Here are a few instances in which utility payments could affect credit scores directly or indirectly:

Your Bills Are Unaffordable

Your credit score could be indirectly affected by your utility bill if they make it difficult for you to afford your other bills like your credit card payments or monthly installments on a loan. 

If your utility bill payments are so high that they strain your monthly budget, this could result in issues making your loan payments and the like on time. Damaging your positive payment history through unaffordable bills will inevitably lead to bad credit. 

Your Utility Bills Are Sent Into Collections

You may be wondering “does paying utilities build credit?” — Well, not necessarily. But not paying them may harm your credit. Suppose your utility payments are so late that they need to be passed off to a collection agency by your utility provider. In that case, this negative information will be given to the credit reporting bureaus and directly affect your credit score. 

All collection accounts opened for an unpaid bill will automatically be reported to credit agencies and included on your credit file. It’s vital that you take care of all your past due utility and telecom payments before they are passed off to a collection agency if you want to avoid a decrease in your credit score. 

Unfortunately, collection accounts will not only result in a temporary decrease in your FICO score. Debts owed to collection agencies are considered derogatory marks, which can remain on your credit for up to seven years! Even after paying off your debt to the collections agency, the record will remain on your credit file.

How To Use Your Bills To Improve Your Credit

While on-time utility payments are not usually included in your credit report, there are now services available like Experian Boost that allow you to benefit from paying bills. Experian Boost can cause your credit score to increase near instantly through the payment information made to utility providers in your bank account statements.

Paying bills on time can now improve credit scores through the Experian Boost platform. This is an excellent way to build credit when just starting or repair bad credit through a good utility payments history. 

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 you’ll 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. 


Can Unpaid Utility Bills Appear on Your Credit Report? – Experian
Does Paying Bills Build Credit? | Capital One

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