Can monthly bill payments affect your credit score?
Your credit score dictates what kind of car you can drive, if you can get into a home, how much interest you pay, and even if you can rent an apartment. Knowing your credit score is vital, and what affects your score is even more critical. Can your monthly bill payments affect your credit score? Unless you’re delinquent on monthly bills like utility payments, they will not affect your credit score. However, there is a way around it.
Here are 4 steps to make on-time monthly payments and boost your credit score.
1. Use a Rent-reporting Service
Paying your rent on time will not affect your credit score. The credit bureaus will not accept this type of information from consumers. If you consistently pay your rent on time, you could use a rent reporting service, like RentReporters, to report your credit to the credit bureaus. It will cost you a fee, but an increased credit score may be worth much more than the price of the service.
2. Sign up for Experian Boost
The Experian credit bureau recently started offering consumers the opportunity to have some of their utility bills reflected within their Experian credit scores. Experian requires access to your checking account information to sign up for the service so the agency can identify your bill payments. Experian will then ask you to verify details and to confirm that you want this information included in your credit report. After your consent is received, your credit score boost will happen immediately. However, if you neglect to pay any reported bills for three consecutive months, the change in score will reverse itself.
It’s also important to note that Experian Boost does not affect your Equifax or TransUnion scores.
3. Use SimpleBills
SimpleBills is a service that currently reports utility bills to Equifax, with plans to include TransUnion and Experian reporting. The credit-reporting service charges $2.99/month and can be helpful for those seeking to improve their score or build a credit history to qualify for a credit card or a loan.
Unfortunately, while your Equifax number may increase through SimpleBills, major score algorithms, like FICO, might not consider this data when calculating your score.
4. Go Off the Beaten Track
If none of these options sounds attractive, consider going the unconventional route with an alternative score. Alternative scores, like the PRBC or the FICO XD Model, will include information like rent, insurance, phone, and utility payments when calculating your credit score. Some alternative scores will integrate this data independently, while others will allow you to self-report these payments, sometimes for a nominal fee.
Alternative scores can help you appear responsible to prospective employers and landlords. But they will not build your credit history or make you eligible for a loan.
The Most Impact
Pay all credit card bills on time, preferably in full, for the most significant impact on your score. Don’t open any new cards, and keep your credit utilization low.
Now you know you can use your monthly bills, which can affect your credit score. If you need it to, it can help. We offer free budget counseling if you need help getting your budget and credit back on track. You can schedule an appointment online or stop by one of our branches to talk to a representative. Set up an appointment here: Free Budget Counseling. If you like this post, comment below and check out our other posts on our MoneySmart Tips blog.