What Bills Help Build Your Credit?

You probably know that skipping bill payments can drop your credit score. The reverse is also true—paying your bills on time can positively impact your credit. But that’s only true when creditors or others report to the credit bureaus. Find out what bills help build your credit—or potentially harm your credit—below.

What Bills Affect Credit Score?

While it depends on the circumstance, all of the following bills could impact your credit score for better or worse.

  • Rent payments
  • Utility bills
  • Cable, internet or cellphone bills
  • Insurance payments
  • Car payments
  • Mortgage payments
  • Student loan payments
  • Credit card payments
  • Medical bills

However, only debts and payments reported to the credit bureaus can impact your score. And here’s where it gets confusing, because:

  • Credit reporting is voluntaryNo lender or service provider has to do it. 
  • Not everyone reports to all three major credit bureaus. The three major credit bureaus are Equifax, TransUnion and Experian. Some creditors only report to one or two of these agencies, so your credit report and score with each can differ.
  • What shows up on your reports can change. A lender that didn’t previously report might begin doing so—and vice versa.
  • The credit bureaus can change policies. Some items, such as tax liens and other public debts, don’t show up on credit reports. However, in the past, these late payments did show up and impact your score. The policies could change in the future, so it’s best to keep up with all payments, even if you don’t think they’re getting reported now.

Bills Commonly Reported to Credit Bureaus

In general, car payments, mortgage payments, student loan payments and credit card payments are often reported to the bureaus. Many of these traditional lenders report to all three bureaus, but not all do.

Payments Not Always Reported to Credit Bureaus

Other types of payments may or may not be reported to the credit bureaus. That includes regular payments you make for rent, insurance or services such as utilities, cellphones, internet or cable.

For most of these companies, the default is not to report your payments to credit bureaus. However, you can invest in a service such as Build It—available through ExtraCredit—that helps ensure your on-time payments for utilities and rent can be added to your report and potentially positively impact your credit score.

Build It works by adding new tradelines for these accounts on your credit reports. Then, as you pay on-time each month, those payments are reported. This can be a good way to demonstrate your positive payment history even if you don’t have a lot of credit accounts.

Reporting Only Late Payments

Some lenders and service providers only report to the credit bureaus if you’re late with your payments. This depends on the creditor’s policy, so ask about it when you set up new accounts. It’s worth knowing whether your payments will help boost your credit or make no difference unless you fall behind. 

Payments That Don’t Ever Make it To Your Credit Report

When you owe municipal fees such as library fines and parking tickets, those accounts don’t generally make it to your credit report. Neither do tax liens or civil court liens. 

Note that this wasn’t always the case. The credit bureaus changed this policy in 2017 and 2018. They could always implement changes that add certain items back on to credit reports in response to updated laws, regulations or consumer and business credit needs.

Another type of payment that doesn’t usually get reported on your credit profile is medical bills. Your doctors’ offices or hospital typically aren’t bothering to make this kind of report.

When Late Payments Become Collections

Even if your payments aren’t usually reported, a creditor might turn you over to collections if you fall behind on your bills. Those collections accounts might be reported, which is a negative record in your credit history.

This is true even for bills that aren’t usually reported at all, such as medical bills, utility payments or insurance payments. If you owe any business money and don’t pay it, a creditor might write it off as bad debt and send your account to collections. The collections company will then report it on your credit report.

The Importance of Paying On Time

Your payment history accounts for 35% of your credit score. It’s the biggest factor in whether that number rises or falls. That makes paying all your bills on time important.

Making on-time payments that are reported to your credit history is great. That means your credit score is getting a positive benefit from those payments. But paying other bills on-time keeps you from falling behind and into collections. That has a potential positive benefit for your credit history too.

Tips for Building Your Credit

Paying your bills on time is one of the best ways to build credit for the future. But if you have a thin credit file—if you have a shorter credit history—or you have bad credit from past mistakes, there are other options. Here are a few tips for building your credit:

  • Sign up for tools like Build It. Get the positive payment history you’re achieving with utility bills and rent added to your credit profile.
  • Apply for a credit builder loan. These are available for those with poor or no credit. They’re often secured by a savings account. Once you pay off the loan, you get access to the savings account and the money in it.
  • Apply for a secure credit card. These require a deposit to secure your original line of credit, but many secure credit card accounts are reported to all three credit bureaus. That’s because they’re specifically designed to help you build or rebuild credit.

You Can Build Your Credit—It’ll Just Take Time

Does paying bills build credit? Yes, but it depends on which bills you’re dealing with and the policies of the lender or provider. It also depends on whether you’re paying those bills on time. Understanding what bills help build credit gives you a leg up on personal finances, but it’s important to pay all your bills on time regardless.

Also remember that building your credit is completely doable, but it might take some time. Be patient—pay your bills on time and in the meantime, try a few other methods to bump up your credit.

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