Can Paying Bills Help Build Credit?

Learn why paying phone and utility bills on time is important to your financial wellbeing


You may know that credit scores are calculated based largely on your past experience with things like loans and credit cards. But according to the Consumer Financial Protection Bureau (CFPB), paying bills on time for utilities and cellphones could also be a factor.

Those types of bills are what’s known as alternative data. Rent payments are another example. But alternative data has to be reported to credit bureaus for it to affect your credit. And you have to be responsible in other parts of your financial life, too. Keep reading to learn more about how paying bills could help you build your credit. 

Does Paying Phone and Utility Bills Help Build Credit?

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. 

Using a credit card to pay utilities? You could affect your credit in another way, even if your payments aren’t reported. That’s because credit cards are typically reported to bureaus. So there are other factors that could affect your credit, like whether you pay on time and how close to your credit limit you get.

It may not affect your credit, but it’s worth checking: Some utilities charge processing fees if you try to pay bills with a credit card.

How Do Utility and Phone Bill Payments Appear on My Credit Reports?

Unlike traditional credit factors, alternative data like utility bills isn’t typically reported to credit bureaus. But if they are, they will appear on your credit reports as what’s known as a tradeline. Tradelines, the CFPB says, typically include account information, including payment history.

If your payment history isn’t being reported, there may be steps you can take to change that. This process, called “self-reporting,” requires a third-party service to get your information into the hands of credit bureaus.

Before you decide to use a self-reporting service, there are a few things you should know:

  1. Companies may charge for their services. And they may not report to all three major credit bureaus: Equifax®, Experian® and TransUnion®.
  2. Even if your bill payments are in your credit reports, that won’t guarantee a boost to your credit score.

You can get an idea of what’s being reported and where your VantageScore 3.0 credit score stands by using CreditWise from Capital One. It’s free for everyone, and using it won’t hurt your credit. You can also get copies of your credit reports from each major bureau by visiting AnnualCreditReport.com.

How Do Cellphone and Utility Bill Payments Affect Credit Scores?

Credit scores can vary based on the formula, or credit model, used to calculate them. That means two things have to happen for utility bill payments to factor into your credit score: 

  1. Your utility bill payments get reported to credit bureaus.
  2. The credit scoring company uses a scoring model that considers bill payment information.

Only some scoring models take alternative data into account. VantageScore®, for example, includes alternative data like rent and utility payments into its VantageScore 3.0 and VantageScore 4.0 models. More recent FICO scoring models, such as FICO 9, do too. But FICO’s most popular model, FICO 8, does not. 

Decisions about extending credit are ultimately up to lenders, though.

Can Late Phone and Utility Bill Payments Affect Credit?

Now the flipside: Getting behind on payments can lower your credit score even if your bills aren’t being reported regularly—whether that reporting is done by companies themselves or through self-reporting.

Depending on how far behind you fall, you could incur penalties or late charges, and your account could be turned over to a collections agency. If it’s reported to the credit bureaus, collections activity can stay on your credit report for seven years, sometimes longer, according to the CFPB. 

What About Other Types of Bills?

Some bills are reported to credit bureaus and may have a greater impact on your credit. That might include loan payments and credit card bills. Alternative data like cellphone bills, electric bills and water bills might not appear at all. Even if they do, those bills alone may not have a big effect on your credit score. 

So you might think about traditional ways you can help yourself build credit if that’s what your goal is:

  1. Secured credit cards: With a secured card, you put a security deposit down to open an account. The deposit is typically refundable at some point. And as you use the card and make on-time payments, you help build your credit history. 
  2. Authorized user: As an authorized user of someone else’s credit card, you could benefit from their credit history—if it’s good—and continued responsible use. The primary cardholder is ultimately responsible for payments. Keep in mind, both people’s credit could dip if negative activity is reported.
  3. Co-signed or joint accounts: Similar to becoming an authorized user, having a co-signer or opening a joint account can help you access credit you may not otherwise qualify for. In these cases, both parties are responsible for payments.
  4. Credit-builder loans: A small loan gets deposited into a savings account, and you make payments over a fixed period to help build your credit history. Once you pay off the loan, you get all the money back.

Staying current on bills and out of collections can help you keep negative information from impacting your credit score.

Building—and rebuilding—credit takes time and real work. But having good credit can help you when you apply for loans, credit cards, jobs and leases. And even if your bills aren’t part of your credit-building strategy, at least you know you’ve got many more options to help improve your score.


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many scoring models used by lenders. It likely won’t be the same model your lender uses, but it is an accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web. The tool is not guaranteed to detect all identity theft.

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