If you keep up with your utility and phone bills and that activity is reported to credit bureaus, it could help boost your credit. But keep in mind, those bills are just one possible factor in credit scoring. And falling behind on them or other bills could have negative effects.
If you don't have a long credit history, an installment loan, which you pay back through set monthly payments, could help you build your score. Auto, mortgage, personal and student loans are all types of installment credit.
Bills Commonly Reported to Credit Bureaus
In general, car payments, mortgage payments, student loan payments and credit card payments are often reported to the bureaus. Many of these traditional lenders report to all three bureaus, but not all do.
Credit scores can be improved in many ways, but paying utility bills on time is usually not enough to make a meaningful difference. While gas, electric, and water are common utility bills that people pay, the information is not reported to the credit agencies and does not appear on an individual's credit report.
Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 564 FICO® Score is significantly below the average credit score.
Typically, cellphone providers don't report your payments to the bureaus—though newer services like Experian Boost can help you manually add it. Unfortunately, it's easier for your cellphone bill to negatively impact your credit because missed payments and new accounts do get reported to the credit bureaus.
Payment History Is the Most Important Factor of Your Credit Score. Payment history accounts for 35% of your FICO® Score. Four other factors that go into your credit score calculation make up the remaining 65%.
The Takeaway. It usually takes a minimum of six months to generate your first credit score. Establishing good or excellent credit takes longer.
Paying utility and cable bills on time won't help your credit, though, because most utilities don't report to the credit bureaus. As with other recurring bills, however, if you put them on a credit card and pay on time, that builds a good payment history and helps your score.
SimpleBills' credit reporting allows you to build positive credit when you pay your utilities on time – without accumulating debt.
Starting today, July 27, consumers can now include their Netflix® on-time payment history on their *Experian Boost™ accounts, which can help improve their credit scores.
Utility Bills
Your electricity or gas bill is not a loan, but failing to pay it can hurt your credit score. While utility companies won't normally report a customer's payment history, they will report delinquent accounts much more quickly than other companies you may do business with.
Does paying car insurance build credit? This is a common question asked by those looking to improve their credit scores to help them save money on insurance premiums and financing. Unfortunately, while paying your car insurance premium on time is important, it does not help to improve your credit score.
Experian Boost is a completely free feature that allows you to connect your utility and telecom accounts to your Experian credit report, which can potentially raise your FICO® score. By linking your bills like monthly water and cell phone service, you can get credit for positive, on-time payments.
It will take about six months of credit activity to establish enough history for a FICO credit score, which is used in 90% of lending decisions. 1 FICO credit scores range from 300 to 850, and a score of over 700 is considered a good credit score. Scores over 800 are considered excellent.
A conventional loan requires a credit score of at least 620, but it's ideal to have a score of 740 or above, which could allow you to make a lower down payment, get a more attractive interest rate and save on private mortgage insurance.
Payment history is a very important factor in your credit score, so making payments on time is one of the best things you can do to build credit. Making timely payments goes beyond your credit card balance. You want to make timely payments on all your bills — car loans, student loans etc. — to establish good credit.
If you have been using credit for only six months or a year, it's unrealistic to expect a score in the high 700s. Still, it is possible to establish excellent credit — a score of 800 or higher, for example — in your 20s.
A 750 credit score generally falls into the “excellent” range, which shows lenders that you're a very dependable borrower. People with credit scores within this range tend to qualify for loans and secure the best mortgage rates. A 750 credit score could help you: Qualify for a mortgage.