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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.
While it depends on the circumstance, all of the following bills could impact your credit score for better or worse.
However, only debts and payments reported to the credit bureaus can impact your score. And here’s where it gets confusing, because:
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.
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.
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.Â
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.Â
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.
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.
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.
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:
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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