Does Paying Bills Build Credit?

By Michelle Lambright Black
Reviewed by: Ana Gonzalez-Ribeiro, AFC®
Published on: 10/12/2022

Payment history is the number one factor that impacts your credit score. With FICO® Scores in particular, payment history makes up over one-third (35%) of your credit score.[1]

As a result, paying bills does have the potential to help you build a solid credit history. But there is a catch to consider as well. Only certain bills can help build credit.

The following guide examines which bills could help you establish credit, and why other financial obligations might not have the same credit-building potential. Below you will also find details about what happens from a credit scoring perspective when you pay your bills late, and why building credit matters in the first place.

Table of contents

What bills can help build credit?

In the United States, the two most popular creators of credit scoring systems are FICO® and VantageScore®. The credit scoring models from each of these developers consider many different factors when calculating your credit score.

Before an account has the potential to impact your credit score for the positive or negative, it must meet certain criteria. Above all, an item must appear on your credit report with at least one of the major credit bureaus (Equifax, TransUnion, or Experian) before it can influence your credit score.

Why don’t all bills help build credit?

Credit scoring models do not consider information that lies outside of your credit reports. Therefore, if a creditor doesn’t report your account to at least one of the major credit bureaus, the bill and its payment history cannot help you build credit.

Credit reporting is a voluntary process.[2] But if a lender or creditor does wish to share information with any consumer credit reporting agency, the company must follow the rules outlined in the Fair Credit Reporting Act (FCRA). Between the strict requirements of the FCRA and credit bureau policies, some creditors may decide not to report data to the credit bureaus.

An unreported account cannot help you build credit history or establish a good credit score. But some of those financial obligations still have the potential to damage your credit history if you pay late.

Certain creditors may choose to avoid monthly credit report updates, but reserve the right to report negative information to the credit bureaus. Other creditors might sell or assign your account to a third party debt collector (aka a collection agency) if you fall behind on payments. And if a collection account appears on your credit report, it could hurt your credit score.

Do phone bills help you build credit?

Most mobile phone providers do not report accounts or payment history to the credit bureaus on a monthly basis. Therefore, your cell phone payments probably won’t help you build credit automatically. (Default on your cell phone payments, however, and a collection account might eventually make its way onto your credit report.)

Can a utility bill help you build credit?

Utility bills behave much like mobile phone bills where credit scores are concerned. Most utility providers do not furnish customer data to the credit bureaus each month. Therefore, positive payment history on these accounts typically won’t build credit.

Again, if you fail to pay your utility bills, you might eventually see the debts surface on your credit reports as collection accounts. That means that utility bills may have the potential to hurt your credit rather than help it (if you pay late).

Does paying insurance help you build credit?

Insurance providers usually do not share payment information with credit reporting agencies. And since your auto insurance, health insurance, life insurance policies (and more) don’t tend to appear on your credit reports, the payments you make on these accounts cannot help you build credit. At present, there are no third-party services you can use to proactively add insurance payment data to your credit reports either.

Like other types of financial obligations, you do need to be careful to pay your insurance premiums as agreed. In rare cases, an insurance company might involve a collection agency if you stop paying your bill (though others may simply cancel your policy).

It’s worth noting that although your insurance won’t generally impact your credit, your credit can impact your insurance premiums. Good credit might save you money on auto insurance, depending on where you live.

Does paying rent help you build credit?

Paying rent could help you build credit, but only if the account appears on your credit report. Not all landlords choose to report rent to the credit reporting agencies.

If a rental tradeline doesn’t show up on your credit report, you can’t ask the credit bureaus to add the account as a consumer. That’s not how credit reporting works, unfortunately. Yet you can consider paying for a third-party rent reporting service like Self.

Rent reporting services often feature a monthly fee. But if a service can help you add positive payment history to one or more of your credit reports, the cost might be worth the potential credit improvement.

It’s also important to understand that even if rental payments do appear on your credit report, only newer credit scoring models will consider that information. If a lender uses an older credit score (such as FICO® score 8 and previous versions) those scores will not factor rent payment data into your credit score calculation.

Do medical bills build credit?

When you visit a hospital or other healthcare provider, it’s not unusual to receive a bill in the mail afterwards. Even if you have health insurance coverage, co-pays, deductibles, and other out-of-pocket expenses can leave you owing money for the medical services you receive.

Paying legitimate medical bills that you owe is in your best interest. This action can protect you from potential collection activity such as negative credit reporting (in the form of collection accounts), lawsuits, and more. Yet you may be disappointed to learn that taking care of your medical bills probably won’t help you build credit.

If you’re struggling to afford medical bills, you’re not alone. The Kaiser Family Foundation found that 46% of insured American adults have trouble paying out-of-pocket medical costs.[3] But ignoring unaffordable medical debts isn’t a good solution to this problem. Instead, consider reaching out to the billing department of your medical provider and ask whether a payment plan or a discount program might be available.

Do student loans help build credit?

Unlike some of the other bills mentioned above, student loans do have the potential to help you build credit. Many private student loan providers and federal student loan servicers report student loans to the major credit bureaus. As a result, if you pay those credit obligations on time, positive payment history on student loans will likely show up on your credit reports.

Additionally, it’s important to understand that a student loan in forbearance or deferment generally does not impact your credit score. So, if you find yourself in a financial bind, these strategies could help protect your credit until you can afford to start making payments toward your student debt again.

How quickly can you build credit through monthly bill payments?

If you’re starting from scratch, it could take up to six months to qualify for a credit score. To be eligible for some versions of the FICO® Score, you must have a tradeline (aka account) on your credit report that is at least 6 months old. Getting a VantageScore® Score may be easier, but you’ll still need at least one account on your credit report to qualify for this type of credit score.[4]

There are a few potential ways to speed up the process. If you want to qualify for a FICO Score sooner than six months, consider the following strategies.

  • Become an authorized user on a family or friend’s credit card. If a family member or friend adds you to their existing, well-managed credit card account, the account might help you qualify for a credit score. For this strategy to work, the card issuer will have to share account information with the credit bureaus under your name as well as the primary card holder’s name. The account should ideally be over six months old with no late payments and a low credit utilization ratio.
  • Get credit for older accounts. If you have utility bills, subscriptions, or mobile phone accounts, you can consider using a third-party service to add those tradelines to eligible credit reports. This approach won’t help you build credit across the board, but it might help you qualify for a credit score that’s based on your Experian and/or TransUnion credit reports sooner.

What happens if you don’t pay a bill on time?

Making late payments can complicate your financial life in a number of ways. First, you might face late fees, loss of services, cancellation of accounts, and more, depending on the type of bill on which you fall behind.

From a credit score perspective, late payments can have a negative impact—sometimes a severe one. Yet it’s tough to predict in advance how much a late payment might damage your credit score. The degree of lateness (e.g., 30 days late, 60 days late, etc.), the frequency of late payments, and how recently the late payments on your credit report occurred can all play a role in the final credit score impact.

What is the point of building credit?

Building good credit can save you money and make your financial life easier to navigate in many ways. The benefits of good credit are numerous, and can include the highlights below and more.

With good credit you may find it easier to:

  • Qualify for financing like mortgages, credit cards, loans, etc.
  • Receive offers for lower interest rates from lenders and credit card companies.
  • Get better repayment terms when you apply for credit.
  • Lock in lower auto insurance premiums.
  • Lease an apartment or house.
  • Open new utility or mobile phone accounts without large deposit requirements.
  • Borrow money for a business that you own.
  • And more.

How do you build credit fast?

Building credit often requires patience. But the basic credit-building formula is simple enough to follow.

  1. Open accounts with companies that report account activity to the major credit bureaus. Credit builder accounts and secured credit cards may be worth considering if you’re trying to build credit from scratch, or trying to rebuild damaged credit.
  2. Always pay on time. The accounts you open to establish credit can only help you if you pay them on time. Late payments could derail your efforts to build good credit.

You might be able to speed up the process with an authorized user account or (to some degree) by using third-party services to report rent, utilities, and more to the credit bureaus on your behalf.

In the long run, however, it’s best to focus on managing the credit obligations you open wisely. Establishing credit and using it in a responsible manner is the best way to earn and maintain good credit over time.


  1. “What Is Payment History?”
  2. “Key Dimensions and Processes in the U.S. Credit Reporting System”
  3. “Americans’ Challenges with Health Care Costs.”
  4. “The Difference Between VantageScore® Scores and FICO® Scores.”

Disclaimer: The Credit Builder Account and Secured credit cards links identified in this article are advertisements for Self products.

About the author

Michelle L. Black is a leading credit expert with over 17 years of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting and debt eradication. See her on LinkedIn and Twitter.

About the reviewer

Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.

Editorial policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

self logo
Written on October 12, 2022
Self is a venture-backed startup that helps people build credit and savings.

Self does not provide financial advice. The content on this page provides general consumer information and is not intended for legal, financial, or regulatory guidance. The content presented does not reflect the view of the Issuing Banks. Although this information may include references to third-party resources or content, Self does not endorse or guarantee the accuracy of this third-party information. Any Self product links are advertisements for Self products. Please consider the date of publishing for Self’s original content and any affiliated content to best understand their contexts.

Take control of your credit today.