How Utility Bills Can Affect Your Credit

Out of all the bills you pay every month, only a few of them are routinely reported to the credit bureaus. For example, credit cards and loan payments are almost always updated on your credit report each month. On the other hand, payments on your utility bills, cell phone, or insurance generally won’t be listed on your credit report. Pay on time or pay a few days late, the credit bureaus won’t know (you’ll probably incur late fees though). The good news is that late payments won’t hurt you. The bad news is that timely payments won’t help you. The worse news is that they can unexpectedly affect you.

Just because a company doesn’t routinely report to the credit bureaus doesn’t mean they won’t ever report. As long as you’re making payments as you’re supposed to, you’re in the clear. However, if your account becomes severely delinquent, the company may report you to the credit bureaus.

When you relocate, it’s important to take care of any outstanding balance on your cable, water, electricity, and other household services. You might ignore these balances if you’re moving to a new location and going with a different provider. However, these companies send your delinquent balance to a collection agency that will then list the account on your credit report.

It's not just an unpaid balance that can help you. While you're a customer, cable and internet service providers might loan you equipment so you can receive their services. Once you disconnect your service, you’ll have a certain amount of time to return your equipment. If you don’t, the company will bill you for the unreturned equipment. And, like other delinquent balances, it may be sent to a collection agency and placed on your credit report.

Unpaid bills can keep you from moving on with your life. For example, some apartment complexes and landlords won’t rent to you if you have unpaid utilities on your credit report. Mortgage companies also won’t give you a loan until you take care of these past due payments.

While paying a collection account is good for your borrowing ability, the blemish will remain on your credit report for up to seven years. It’s better to avoid the damage to your credit score and your credit reputation by brushing off your payments.

If you’re moving, be sure to have the service disconnected so charges don’t continue to accrue after you’ve moved. Also, give the company a forwarding address to be sure that bills reach you. If you’re leaving behind a roommate, have them change the service to their own name.

The same thing goes for switching service providers. Confirm that your account has been cancelled and be sure to return any equipment you have.

Use the credit report dispute process to have inaccurately reported delinquencies removed from your credit report. You can do this online through the credit bureaus' website if you’ve recently ordered a credit report. Or, you can send a letter to the credit bureaus' address for receiving disputes. Follow up with the service provider if your credit bureau dispute isn’t successful. Find out why there was still a balance and if there was an error on the service provider’s part, ask them to remove the negative information from your credit report.