Your credit score is determined by the information on your credit report, typically supplied by lenders. Since your electricity or oil bill is not a loan, regularly paying it off will not improve your score. Most utility companies do not routinely share their information with credit reference agencies. However, failing to pay your electric or oil bills may eventually hurt your credit score.
Your FICO score, named after the company Fair Isaac Corporation, is affected only by the information available in your credit report. Your score will range between 300 and 850, taking into account your payment history to lenders, current level of indebtedness, the types of credit you carry as well as the length of your credit history and applications for new credit. The score usually is not affected by utility bills.
Late and Missed Payments
You may have a good reason for skipping out on your utility bills altogether, such as being out of the country or being hospitalized for a long time. Some cases could just be mistakes or negligence on your part -- for example, if you just graduated and moved out of an apartment without clearing the final bill from the utility. However, when these relatively small amounts become several months past due, the utility company will take measures to recover its money, including reporting your delinquent account to credit agencies.
Impact of Collections
If you haven't paid your electric and oil bills, you may eventually find them listed on your credit report as accounts in collection. The utility may not have the wherewithal to compel you to pay. It will write off the delinquent account and sell it or assign it to a debt collector. The collection agency will attempt to track you down for payment and once notified, it will report your information to the credit bureaus if you continue to be late. Collection items can significantly damage your credit score, since they are included in your payment history and are regarded to be very negative entries on your report.
The most direct way to ensure your credit score is not impacted by your electric and oil bills is by paying on time, including any final bills that are incurred when you discontinue service. Keep track of what’s in your credit report by requesting your free copy from www.annualcreditreport.com so that you know what potential lenders see on your report. Make sure all your information is fully accurate and up to date. Utility bills may seem trivial, but missed payments that seem harmless can really hurt your credit.
- My FICO: About Your Credit Score
- Utility Bills and Your Credit Report
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- TransUnion. "Get a Credit Score and Transunion Credit Report in Just a Few Days - Only With Ecredable Lift." Accessed June 1, 2020.
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- Consumer Financial Protection Bureau. "What Is a Judgment?" Accessed June 1, 2020.
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- myFICO. "How Do I Correct Errors on My Credit Reports?" Accessed June 1, 2020.
Dr Jack Gordon, the Chief Technology Officer at Strontium Logistics, is a 20-year veteran of the engineering and marketing business who favors stiff drinks, good debates and developing innovative digital marketing strategies to help companies grow.