Knowing what doesn’t affect your credit score is just as important as knowing what does—it can save you from falling for scams, taking bad financial advice, and signing contracts with companies who make fishy claims about influencing your credit score.
The first thing to know is that in order for a bill to impact your traditional FICO credit score, the company issuing the bill must report the transaction to at least one of the three national credit bureaus: Experian, Equifax, or TransUnion. In general, the majority of your monthly payments to various service providers won’t be reported to the bureaus.
Common monthly bills that have no direct impact on your credit score:
- Utilities (gas, water, and electric service)
- Insurance payments (auto, renter and homeowner insurance, etc.)
- Bills from medical providers
- Cell phone payments
- Cable, internet, and satellite service
- Memberships to health clubs or gyms
- Childcare service
- Rent*
- Someone else's bills (it doesn’t matter who pays a bill, it only gets reported on the credit report of the person who owns the debt or account)
*Whether or not monthly rent payments affect your credit score is becoming a little more complicated. For the most part, rent payments aren’t reported to the credit bureaus, which means paying your property management company on time won’t boost your credit score. There are a few exceptions, however, and it’s always a good idea to ask your landlord if they report rent payments to any of the credit bureaus.
Rent-reporting services
If you’re working to build up a healthy credit score or repair a damaged one and would like your on-time rent payments reported, you can sign up for a rent-reporting service such as Rent Reporters or Rental Kharma. Services such as these work by adding a new trade line to your credit report that reflects up to two years of rental payments (the good and the bad, so beware if you’ve made routine late payments) and the length of rental payment history. You will have to pay for these services, but it may be worth it if you’re struggling to improve your score through other means.
Past due payments on unreported bills
If your account with a company becomes delinquent (30 days or more past due), it may be given over to a collection agency, and they do report your payment habits to the credit bureaus. Having an account in collections can cause your credit score to drop by 100 points or more. In this case, poor payment habits on bills that would not otherwise affect your credit score will damage your credit.
There are other consequences for late payments, including late fees, penalties, or cancelation of services. For these reasons, and more, it’s still important to make all payments on time.
Alternative credit scores
Alternative credit scores are being developed beyond the traditional FICO score most lenders use to judge a person’s creditworthiness. These new scores include payment history on the bills listed above and/or management of checking and savings accounts. Their goal is to expand the scope of financial behavior and responsibility included in a person’s credit file, giving more people access to car loans, mortgages, and other lines of credit.
It can be frustrating when good financial behavior like always paying your cell phone and water bills on time isn’t rewarded with a higher credit score. However, strengthening these financial habits will put you in a strong position when credit-building options become available.
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