Does My Phone Bill Affect My Credit Score?

Whether a phone bill affects your credit score is a common question. Credit scores are a fundamental component of financial life. They determine eligibility for financial products like loans, credit cards, and housing. Understanding factors that influence credit scores is important for managing personal finances. This includes knowing how routine payments and phone service applications affect your credit report.

How Regular Phone Bill Payments Affect Credit Scores

Regular, on-time payments for your monthly phone bill typically do not directly impact your credit score. This is because most phone companies do not report positive payment history to the major credit bureaus, such as Experian, Equifax, and TransUnion. Phone bills are considered utility payments, rather than traditional credit accounts like mortgages or credit cards. Consequently, simply paying your phone bill on time each month will not, by itself, help build positive credit history or improve your credit score.

The Impact of Unpaid Phone Bills

While positive payment history for phone bills is usually not reported, negative information can affect your credit score. If a phone bill becomes past due (generally 30 days or more), the phone company may report the delinquency to credit bureaus or send the account to a collection agency. Accounts sent to collections are reported to credit bureaus and can damage your credit score.

These negative marks, such as collection accounts or late payments, can remain on your credit report for up to seven years from the original delinquency date. Payment history is a major factor in credit score calculations, often accounting for a significant portion. An unpaid phone bill that goes to collections can have a significant negative effect on your creditworthiness.

Credit Inquiries for Phone Services

When applying for new phone service, especially for a postpaid plan with a new device, phone companies often perform a credit check. This process results in a “hard inquiry” (also known as a hard pull) on your credit report. A hard inquiry occurs when a lender or service provider checks your credit history for a lending decision.

A single hard inquiry can cause a small, temporary dip in your credit score, by a few points. These inquiries remain on your credit report for up to two years, though their impact on your score lessens after about one year. This differs from “soft inquiries,” such as checking your own credit score, which do not affect your score.

Services That Report Phone Bill Payments

Although traditional phone companies do not report positive payment history, some services allow phone bill payments to be reported to credit bureaus. Programs like Experian Boost, for example, enable consumers to add their on-time phone and utility payments to their Experian credit report. This can help individuals with limited credit history or those looking to improve their scores.

These services work by allowing users to link their bank accounts, which then identifies and reports eligible recurring payments. While Experian Boost focuses on reporting to Experian, other services, such as eCredable Lift, may report to TransUnion and Equifax. Consumers should research these services carefully, understanding fees and which credit bureaus they report to, as not all services report to all three major bureaus.