Getting a bill in the mail is not one of the most exciting times in life. Responsible, timely people, though, make sure that their utility and phone bills get paid on time. That’s why I get asked this question very often: How come I don’t have credit? I pay my rent and all my utility bills on time!

Here’s your answer: Utility and phone bills do not help build credit!

So now you became even less excited about paying those bills, huh? But yes, you read right. Unfortunately, paying utility bills on time will not in any way help you build credit. You could never miss a single payment on any utility bill for 20 plus years, and you still will not have a credit score. 

Unfortunately, utility and phone companies do not report the on-time payments to the credit bureaus. Therefore, it’s impossible for the on-time payments to help you build credit.  In order to build credit, you will need to either open a credit card or take out any other loan that reports the on-time payments to the credit bureaus.

Why not?

The credit bureaus claim that the reason on-time utility bill payments are not reported is that they are not loans. But that’s 100 percent not true. What difference does it make if a bank lends you money or if a utility company lends you water? They both are lending you goods on the condition of repayment.

The real reason utility bills are not reported is very simple. The credit bureaus charge a fee from the companies who want to report to them. Utility companies feel that they do not have any benefit from reporting their bills to the credit bureaus. Therefore, why pay? On the contrary, credit card issuers and banks base their lending decisions on credit scores. So if one bank would not pay to report their trade lines then the next bank would stop as well. Plus, consumers would rather do business with banks that do report because they want their credit cards and loan products to help them build credit. Therefore, it’s become common practice for banks to pay to report their trade lines to the credit bureaus.

Will missing payments on a utility bill affect my credit?

There is a good side to the package as well. Since utility bills don’t get reported to the credit bureaus, missing a payment on a utility bill will not affect your credit either. But please note: If you do not pay your utility bill for a few months, the company will eventually sell the debt to a collection company. The collection company will most likely report the collection to the credit bureaus, which will of course, affect your credit score.

Exception to the rule: There are very few phone companies who will report even a 30-day late payment to the credit bureaus, but most don’t.

Experian Boost

Experian Boost does give you the option to have your utility payments reported on your credit report. If you sign up for Experian Boost it means that you voluntarily choose to give Experian access to your bank accounts. Experian then reviews all your bank information and they add your utility payments to your report. Experian claims that only on-time payments are reported and not the delinquent marks.

This is good if you do not have any credit and want your utility payments to at least help you build credit. However, if it helps, it will only boost your Experian report and not Transunion or Equifax. You can read more about Experian Boost here.