Home > Credit Score > How a Dripping Faucet Could Keep You From Buying a Car

Comments 0 Comments

Can you imagine that a dripping faucet might keep you from buying a car? Can you imagine that your air conditioner might keep you from buying a house? Can you imagine how your cell phone might cost you thousands of dollars in interest on a higher mortgage?

“Impossible” you might say.

Think again! Those things are entirely possible, and even probable! Here’s why: Your credit reports are made up of several pieces of information about you flooding into the credit reporting agencies. You probably already know about some of the information — your home address, credit cards, payment histories and bankruptcies. Many consumers are surprised, however, to discover one piece of information that they didn’t know was being reported on their credit reports, yet this information can severely hurt credit scores if you are not careful.

Unpaid utility bills are now being reported pretty consistently on credit reports. Your phone bill, power bill and water bill (and other utilities you might have) could show up on your credit report and therefore will influence whether or not lenders will loan you money.

So that dripping faucet might run up your water bill, hurt your credit if you pay late, and keep you from getting a car loan. And that air conditioner running through the summer might run up your power bill, hurt your credit if you pay late, and keep you from getting a mortgage. And that cell phone might run up your cell phone bill, hurt your credit if you pay late, and bump you up into a higher interest rate bracket on your mortgage.

It might be tempting to skip a payment now and then or not pay on time, especially if money was tight and you needed to direct your funds elsewhere. But it’s important to pay those utility bills on time — not only to keep your utility providers happy but also to ensure that you keep future lenders happy as well!

Here are some tips to help you handle your utility bills to make sure that they don’t hurt your credit score:

  • Watch your bills closely and mark on a calendar when they should be paid.
  • If you want to minimize the number of utility bills that impact your credit report, see if you can bundle services (i.e. your telephone service provider may also provide you with Internet services)
  • Reduce the number of times you switch service providers because they may pull your credit report each time you switch.
  • Ask your utility provider if you can get on fixed average payments so that your bill each month is a predictable amount. This will keep you from getting surprised after a month of particularly high utility usage.

Not every utility is reported, but I am seeing an increasing number of utilities reported so consumers who are smart about their credit should manage their utility bills in the same way they manage other credit-impacting accounts like loans and credit cards.

Image: Jeff Drongowski, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team