Do Utilities Affect Your Credit Score?

A credit score reflects an individual’s history of borrowing and repaying debt, used by lenders to assess risk for loans or credit products. Utility bills, such as electricity, gas, water, internet, and phone services, are regular household expenses. This article clarifies how these payments influence credit scores.

Direct Reporting of Utility Payments

Routine, on-time utility payments generally do not appear on your credit report or build positive credit history. Most utility companies do not report positive payment data to the three major credit bureaus: Experian, Equifax, and TransUnion. This is because utility payments are not considered a form of credit or a loan by these reporting agencies. Therefore, consistently paying your monthly utility bill on time will not, by itself, improve your credit score. While some niche services or bundled bills might be exceptions, this direct positive reporting is not standard for standalone utility accounts.

Indirect Impact of Utility Payments

While timely utility payments do not boost a credit score, failing to pay them can cause significant harm. If a utility bill remains unpaid for an extended period, typically after 30 days of delinquency, the utility company may send the overdue account to a third-party collection agency. Once a debt is placed with a collection agency, that agency will report the delinquent account to the major credit bureaus. A collection account on a credit report can severely damage a credit score. This negative mark can remain on your credit report for up to seven years from the date of the first missed payment that led to the collection, even if the debt is eventually paid.

Utility companies may also perform a credit check when you apply for new service. These inquiries, often “soft pulls,” generally do not impact your credit score, though some might be “hard pulls” that could cause a minor, temporary dip. A poor credit history might lead to a security deposit requirement, which can range from a few dozen to several hundred dollars, before service is initiated. Additionally, large, unpaid utility debts could result in a civil judgment or lien, which are public records. These public records could still be found by lenders or landlords through other background checks.

Protecting Your Credit Score Through Utility Management

Managing utility payments effectively helps safeguard your credit score. The most straightforward step is to pay all utility bills by their due dates to prevent them from reaching collections. If you anticipate difficulty paying a bill, contact your utility provider immediately; many companies offer payment plans or assistance programs to help customers avoid delinquency.

Regularly monitoring your credit reports from all three major bureaus (Experian, Equifax, and TransUnion) is also a proactive measure. You are entitled to a free report from each bureau annually via AnnualCreditReport.com. This allows you to identify any collection accounts from utility companies that might be erroneous or unexpected. If you discover inaccurate information, such as an incorrect collection account or a debt you have already paid, you have the right to dispute it with the credit bureau and the company that reported it.