Home > Credit Score > Which Monthly Bills Affect Your Credit Score? Most People Don’t Know

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Here’s the truth about your credit score: There are more things that can hurt it than help it, and there’s some confusion about how that works.

A recent survey from TransUnion asked consumers about a few common bills and whether or not they’re regularly reported to the major credit reporting agencies. Generally, things like rent payments and utility bills aren’t reported to credit bureaus, so you don’t get “good credit” for making those payments on time. However, if one of those bills is overdue, it might end up hurting your credit, if the company you owe sends the bill to a debt collector.

If you thought paying your rent or electric bills on time helped your credit standing, you’re not alone: 48% of those who responded to TransUnion Interactive’s online survey said they thought rent payments were regularly reported to credit bureaus. Even more confusion surrounded other bills: 53% thought cable and internet payments are regularly reported, 54% thought their utility payments are reported, and 52% thought credit bureaus had record of their cellphone payments. That’s not the case.

At the same time, if you fail to pay those bills, your credit score may be in jeopardy. Collection accounts have a negative impact on your credit standing, and even after you pay the debt, your credit will continue to suffer. The damage will be short-lived if the collection account is an outlier on your credit report, but multiple debts in collection will really hurt your score, and making on-time cellphone bill payments won’t directly improve your credit standing. Unfortunately, you don’t benefit from doing the right thing, but if you screw up, you’re in trouble.

There are plenty of regular bill payments regularly reported to the major credit bureaus. Any time a bank or lender extends you a line of credit, your payment history for that product will be reported, like credit card bills, student loan payments, mortgage payments and auto loan payments. No one type of credit payment is superior to another — if your mortgage is more than 30 days past due, it’s just as bad as your credit score if your credit card bill is more than 30 days past due (but if your mortgage goes unpaid for a long time, you’re headed for much worse problems).

The TransUnion data is based on a survey of 1,001 U.S. consumers ages 18 through 64 who rent their current living unit. Even though the respondents are exclusively renters, it’s surprising that only 29% knew mortgage payments are regularly reported to credit bureaus and, as a result, have a significant impact on credit scores.

Paying rent on time may not be your path to a high credit score (though it’s a data point the credit scoring industry is looking at as a potential risk indicator), but it’s still an important priority, so you avoid late fees and dealing with debt collectors. If you’re looking to improve your credit, there are plenty of strategies to consider, and it’s a good idea to track your progress by getting two of your free credit scores on Credit.com.

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  • Eddie J

    Sadly and unfairly, most utility companies are big campaign donors and
    lobbyists to politicians who refuse to have laws changed. Utility
    companies in particular, make millions on late fees,
    disconnect/reconnect fees and other anti-consumer fees and want to keep
    it that way. Best bet is to strongly and consistently lobby your state
    and federal representatives to stop pandering to this crap for the sake
    of political expediency.

  • Christine DiGangi

    A lot of people feel that way, and companies generating scoring models have given it some serious consideration. It’ll be interesting to see if such payments are included going forward, given the strong opinions on it. thanks for sharing.

  • http://www.credit.com/ Credit.com Credit Experts

    The biggest single factor is payment history — whether you have paid on time. Here’s how to get your free credit score, along with a personalized guide to how you stack up on the factors determining credit score.

  • http://www.credit.com/ Credit.com Credit Experts

    You’re right — for a creditor to be on your credit report, the creditor must report the account. (That’s why some things may not appear on all your credit reports.)

  • Erick Arwa

    Let me ask, Considering the amounts owed, new credit, credit profile, payment history, type of credit etc, what formula do we use to finally arrive at the credit score?

    • http://www.Credit.com/ Gerri Detweiler

      The exact formula is the credit scoring company’s secret sauce!

  • Kenneth Rome

    I pay my water bill in 8 monthly installments ( the first 8 months of the bill year) So after the first payment I do not owe anything but am in front in payment, increasing each month. Why should this bill be called a debt and affect my credit rating? Do the water company pay their bills before they receive services or goods. Do they pay out wages before they have been earned?

  • Krisstoferg

    ive been paying all my bills on time for years and thinking i was making my credit better but i guess i was right the first time saying get what you can for free and screw the companies since in order for me to have anything besides POOR credit, i’d have to spend tons of money taking loans that i dont need and theres no space for DISABLED in the employment section either so what if i have to pay cash for the crap cars i can afford i’ll save a ton of money not paying for the other crap

  • tedmingo

    The sad part is you cannot report your tenant to the credit scorekeepers when they fail to pay their rent on time.

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