Can paying bills help build credit?
and loan payments. But using alternative data, which includes rent and utility payments, is becoming more common among credit scorers and lenders.
What you’ll learn:
-
Paying utility, rent and cellphone bills on time every month can help build your credit if the activity is reported to credit bureaus.
-
Utility bills aren’t typically reported, but third-party services may be available to self-report your payment history.
-
Using a credit card responsibly by paying statements on time every month is another way to build credit.
Does paying utilities build credit?
Not automatically. The Consumer Financial Protection Bureau (CFPB) says most utility companies don’t provide data on a consumer’s payment history to the major credit bureaus. That means you may have to take steps to have them added to your credit reports.
What utility bills aren’t automatically reported to credit bureaus?
A variety of bills could be considered utilities, including:
- Gas
- Water
- Electricity
- Internet
- Television and streaming services
- Phone service
- Trash collection
How do I add utility bills to my credit report?
Self-reporting is a way to get alternative data to the credit bureaus. Despite its name, the process involves using a third party. You can check with a service to learn more about fees, which bureaus the service reports to, and how any missed payments might be reported.
Can late utility bill payments affect credit?
If you self-report utility payments to credit bureaus, negative information could also be shared with them. In turn, that could affect your credit scores.
If you’re not self-reporting, utility companies typically don’t report payment activity to credit bureaus. But if a bill is sent to collections, that could hurt your credit scores. You can learn more from the CFPB about how debt collections work.
What bills build credit?
Other monthly bills that could help you build credit if paid on time and reported to credit bureaus include:
- Credit card payments
- Installment loans
- Mortgages
- Credit-builder loans
Key takeaways: Does paying bills build credit?
Paying utilities, cellphone service and rent can help you build credit if that activity is reported to the credit bureaus.
If you want to track and monitor your credit, you can use CreditWise from Capital One. It’s free. And using CreditWise won’t impact your credit scores.
