Which Monthly Bills Affect Your Credit Score?

Paying your bills on time is the most important step you can take toward building a strong credit score. The higher your score, the more likely it is you’ll qualify for the best products at the lowest rates.

Not all bills, however, will affect your credit score. Only those monthly payments that are reported to the three national credit bureaus (Equifax, Experian and TransUnion) can do that. Typically, your car, mortgage and credit card payments count toward your credit score, while bills that charge you for a service or utility typically don’t.

Rent

You’d think paying your rent on time would boost your credit score. Traditionally, though, on-time rent payments haven’t been reported to the three credit bureaus and therefore have no impact on your score.

This is starting to change. Equifax, Experian and TransUnion will now include rent payments in your credit reports, but it’s up to your landlord or property management company to report those payments to the bureaus. If they choose not to, your rental payments will continue to have no effect on your score. Experian recommends that you ask your property management company or landlord whether they report rent payments to the bureaus. If they don’t, you can sign up for a service that will, such as RentTrack or PayYourRent, which generally charge a fee.

Utility, cable, internet and phone bills

Paying your utility bills or bills related to cable, internet and the phone typically won’t help your credit score. That’s because these types of companies typically don’t report payments to the credit bureaus.

But this, too, is starting to change. Experian Boost is a relatively new service that adds your utility and telecommunications payments to your credit report by connecting to your online bank accounts.

Bear in mind: Just because a bill doesn’t directly affect your credit score is no reason to take it lightly. Miss too many payments, and your creditor could send your account to a collection agency. Having an account in collections will show up on your credit report and lower your credit score. And even if you pay off the debt, a collection notice remains on your credit reports for seven years.

Insurance payments

Your monthly payments for life, car, renters, homeowners and health insurance may hurt your score if you pay late, but they won’t help if you pay on time since they are typically not reported to the credit bureaus.

You do not want to fall behind on insurance payments. If your insurers drop you from their coverage, you could find yourself in financial pain due to accidents or medical costs. And if a fire should destroy your household items? Without insurance, you might find yourself running up debt to replace furniture, clothing and electronics.

Car payments

The payments you make on your vehicles are reported to the three credit bureaus. If you pay these on time every month, your credit score will get a boost. If you’re late? Even one missed payment can cause a high credit score to drop by triple-digit points.

A late payment on your auto loan remains on your credit report for seven years. This means lenders see that missed payment whenever you apply for a loan. This could result in a rejection or higher interest rates.

The good news is that a payment may not officially be reported as late to the credit bureaus until it is at least 30 days overdue. So if you’re late on your car payment by just two weeks? Make that payment immediately to save your credit score.

Mortgage payments

Your monthly mortgage payment is another important bill to always pay on time. For one, it is reported to the credit bureaus, and it has a significant impact on your credit score. More important, if you fall too far behind on your payments, your lender could initiate foreclosure proceedings, which could eventually lead to the loss of your home. Foreclosures will remain on your credit report for seven years and will cause your credit score to plummet.

Credit card payments

The payments you make on your credit cards are also reported to the credit bureaus and can have a big impact on your score. And remember that your credit card provider might charge you a penalty for making a late payment, perhaps saddling you with a high penalty interest rate, which can add up quickly on any balance you’re carrying.