If you’re working hard to build good credit, it makes sense that you might want to add certain bills to your credit report–like utilities or rent. After all, who wouldn’t want to receive credit for the things they’re doing right where credit history is concerned?
In some cases it is possible to add select types of bills to your credit report. Yet it’s helpful to understand how the credit reporting process works in these situations, the potential obstacles you could face, and the times when adding a bill might not be an achievable goal.
Credit scoring models, like FICO and VantageScore, consider a wide variety of information on your credit report. Note that the key term in the previous sentence is credit report.
Before a credit obligation (aka a bill) can have any credit-building potential, the account must appear on your credit report with at least one major credit reporting agency — Equifax, TransUnion or Experian. For the most credit-building potential, a credit obligation should appear on all three of your credit reports. From there, how you manage the account (i.e., on-time payments, late payments, etc.) determines whether it has a positive or negative influence on your credit score.
Here are a few types of accounts (aka tradelines) you might find on a credit report.
In addition to the accounts above, you may also be able to build credit with other types of bills like utility bills, rent, mobile phone bills, or even certain subscription services. Yet since these types of accounts don’t traditionally show up on your credit reports, you might have to take some extra steps if you hope to use them to build credit.
Most of the information on credit reports comes from companies known as “data furnishers.” Data furnishers can be lenders, credit card companies, and other creditors that share information about consumers with the credit bureaus on a voluntary basis.
Most utility companies do not opt to furnish data to the credit bureaus. According to FICO, a mere 2.4% of consumer credit bureau files feature utility payment data such as electricity, water, and gas bills, despite the fact that over 60% of adults in the U.S. pay such bills. And although 92% of consumers have mobile phones in the U.S., just 5% of those people have telcommunications data on their credit reports.
At present, there is no way to self report bills to the credit bureaus as a consumer. The credit bureaus do not accept consumers as data furnishers at this time. Yet there are programs you can use to try to add utility bills, rent, and more to your credit reports.
If you use one of the services above and are able to add utilities to any of your credit reports, those accounts could have an impact on your credit scores. Yet whether the accounts help or hurt you may depend on how you manage the account.
Consider eCredable Lift as an example. If you use the service there’s a chance your TransUnion-based credit score may improve if utility accounts with positive payment history show up on your TransUnion credit report. But if the new utility accounts on your credit report show late payments, your credit score might decline instead.
With Experian Boost, however, the credit bureau only considers accounts with positive payment history. Any late payments on added utility accounts, according to the credit bureau, won’t have a negative impact on your Experian-based credit scores. Yet if for any reason your credit score does decline after you sign up for Experian Boost, you can disconnect the service and the accounts you requested the credit bureau to add should come back off your Experian report.
There’s nothing wrong with trying to get credit for the bills you’re already paying on time, like utility accounts or a cell phone. In fact, this approach can be a smart strategy. But there are also other credit-building strategies that don’t involve self reporting.
Below are three options you may want to consider.
It’s important to establish a solid foundation of credit history across all three credit bureaus. Adding bills like utilities and rent to your credit report could be helpful. But they should probably only be a piece of your overall credit-building plan.
Disclaimer: The Level Credit, Credit Builder Account, and Secured credit cards links identified in this article are advertisements for Self products.
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.
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 www.AcetheJourney.com 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.
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