In the complex world of personal finance, many consumers wonder about the relationship between their monthly utility payments and their credit scores. The question “Do utility bills affect credit scores?” doesn’t have a simple yes or no answer—it’s nuanced and depends on several factors. To see which of these factors my apply to you, let’s take a closer look at the connection between utility bills and credit scores, providing you with the knowledge needed to make informed decisions about your financial health.

Utility bills typically don’t appear on credit reports

Historically, utility companies—providers of electricity, water, gas, internet, and phone services—have not routinely reported payment information to the three major credit bureaus (Equifax, Experian, and TransUnion). This means that, unlike credit card payments or mortgage payments, your on-time utility payments generally weren’t building your credit score.

When utility bills could negatively impact your credit

Despite not being regularly reported, utility bills could still affect your credit score negatively in the following scenarios:

1. Accounts in collections: If you fall significantly behind on payments (typically 30-90 days, depending on the provider), utility companies may send your account to collections. Collection accounts are reported to credit bureaus and can severely damage your credit score.
2. Hard inquiries: When opening new utility services, some providers perform credit checks that result in hard inquiries on your report. While a single hard inquiry typically has minimal impact (lowering scores by about 5-10 points), multiple inquiries in a short period can be more damaging.
3. Judgments from lawsuits: If a utility company successfully sues you for unpaid bills, the resulting judgment may appear on your credit report in some jurisdictions.

Opt-in reporting services

The relationship between utility payments and credit scores has been evolving, with several programs now allowing consumers to have their utility payment history included in credit reports:

• Experian Boost: Launched in 2019, this free service allows consumers to connect their bank accounts to Experian, which then identifies utility and telecom payment histories and adds them to their Experian credit report. This can positively impact FICO® Scores based on Experian data.
• UltraFICO: This scoring model incorporates banking activity, including utility payment history from your checking account, to supplement traditional credit information.
• eCredable Lift: This service reports utility payment history to TransUnion, potentially improving your credit profile.

Alternative credit data and scoring models

The credit industry is increasingly recognizing the value of “alternative data” in assessing creditworthiness:

• FICO® Score XD: Uses alternative data, including utility payment history, to generate scores for consumers with limited traditional credit histories.
• VantageScore 4.0: Places greater emphasis on payment patterns over time, including utilities when available.

The impact of utility bills on different consumer segments

Which category do you fall into?

• Credit invisible consumers: An estimated 26 million Americans are “credit invisible,” meaning they have no credit history with major credit bureaus. For these consumers, having utility payments reported can be transformative, providing a path to establishing credit.
• Consumers with established credit: For those with established credit histories, the impact of adding utility payment information is typically modest—perhaps a few points in either direction depending on payment history.