Wiktor Wise
Utility companies, including electric companies, are not required to report your payments to any of the major credit reporting agencies. However, if you fail to pay your bills and your debt is sent to a collection agency, this will likely be reported to the credit bureaus and can have a lasting negative effect on your credit score. On the other hand, consistently paying your utility bills on time will not improve your credit score, but it can make it easier for you to get utility services in the future.
| Characteristics | Values |
|---|---|
| Whether utility companies report to credit bureaus | No, utility companies do not report to the three major credit bureaus (Experian, TransUnion and Equifax) |
| Whether paying utility bills on time helps credit score | No, paying utility bills on time does not help your credit score |
| Whether not paying utility bills hurts credit score | Yes, not paying utility bills can hurt your credit score if the debt is sent to a collection agency |
| Whether utility companies charge a fee for paying by credit card | Yes, some utility companies charge a fee for processing the payment on a credit card |
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What You'll Learn
- Utility companies don't report to the three major credit bureaus
- Unpaid bills sent to collection agencies can appear on your credit report
- Utility companies may charge a fee for processing credit card payments
- Financial apps can help report utility payments to credit bureaus
- Credit card payments for utility bills can help build your credit score
Utility companies don't report to the three major credit bureaus
Utility companies generally do not report to the three major credit bureaus—Experian, TransUnion, and Equifax—unless you fall behind on your payments. This means that paying utility bills on time won't help your credit score, but failing to do so could hurt it.
Utility bills are typically only reported to the credit bureaus when they are past due or sent to a collection agency. Once a collection agency assumes the debt, it usually opens a collection account in the debtor's name and sends a record of that account to one or all of the three major credit bureaus. When that happens, the collection account becomes a part of your credit file and can have a lasting negative effect on your credit score for up to seven years.
Although utility accounts are not usually listed on your credit report, third-party services like LevelCredit, Experian Boost, and eCredable Lift can send the bureaus your utility account information and payment history. A record of consecutive on-time payments over the long term will improve your credit.
In most states, utility providers are not obligated to regularly report payment histories to the major credit bureaus. Additionally, there are significant disincentives for them to do so. Reporting to credit agencies can be expensive, and it makes utility companies subject to the Fair Credit Reporting Act, with potential legal fallout if they are unable to meet the requirements of the Act, such as updating payment information regularly and responding to disputes within legally mandated timeframes.
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Unpaid bills sent to collection agencies can appear on your credit report
Utility companies, including electric companies, do not report account information and payment history to the three major credit bureaus: Experian, TransUnion, and Equifax. As a result, on-time payments do not add positive information to your credit reports. However, if you fail to pay your electric bill and it is sent to a collection agency, that debt could show up on your credit report from any of the big three credit bureaus.
Once a collection agency assumes the debt, it typically opens a collection account in the debtor's name and sends a record of that account to one or all of the three major credit bureaus. When that happens, the collections account becomes a part of your credit file and can have a lasting negative effect on your credit score. These are considered derogatory marks and can remain in your credit file for up to seven years. Even if you pay the collection agency and the account is closed, a record of the debt will still remain, and you may still be charged expensive fees that increase your overall debt.
If you are unsure whether you've had a collection account added to your credit file, you can check by requesting a free copy of your credit report from Experian. Periodically monitoring your credit reports can help you stay on top of any changes in your accounts, which may help your credit history over time.
Additionally, at least one specialty consumer reporting agency, the National Cable, Telecommunications and Utilities Exchange (NCTUE), shares information about new accounts and payment histories among its members, which include over sixty large telecommunications, pay TV, and utility companies. An NCTUE member may use this information to decide whether to offer you services or require you to pay a deposit before receiving services.
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Utility companies may charge a fee for processing credit card payments
Utility companies generally do not report to the three major credit bureaus (Experian, TransUnion, and Equifax) about your payment history or whether you pay on time. However, if you fail to pay your bills and the debt is sent to a collection agency, this can show up on your credit report and negatively impact your credit score.
In the United States, companies are generally allowed to charge a credit card processing fee, and this is a common practice among utility companies. The fees can vary, with some companies charging a flat rate, such as $1.50 for online or phone payments, while others may charge a percentage of the transaction amount, typically ranging from 1% to 3%handle payments in-house instead of using a third-party card processor, allowing them to eliminate the need to charge convenience fees. Additionally, to avoid these fees, customers can choose to pay by methods that do not incur fees, such as by mail, in person, or through an e-check.
While the convenience of card payments is appealing, the associated fees can be a burden, especially for low-income customers or those who make multiple payments per month. As a result, some utility companies have chosen to absorb the processing costs to better serve their customers and increase the likelihood of timely payments.
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Financial apps can help report utility payments to credit bureaus
Utility companies, including electric companies, typically do not report to the main credit bureaus, such as Experian, TransUnion, and Equifax. Utility bills do not usually show on a credit report, and as a result, paying utility bills on time does not improve your credit score. However, if you become delinquent in paying your utility bills, the utility companies could report the late payments to the credit bureaus, and your credit score could decline.
Another way to ensure that your utility payments are reported to the credit bureaus is by using a credit card to pay your monthly utility bills. Since most credit card companies report payments to the credit bureaus, you will receive credit each month you pay your credit card bill on time. If you are unable to secure your own credit card, you may have a friend or family member willing to add you as an authorized user, giving you the ability to use their card to make your monthly utility payments.
Credit builder loans can also help you build your credit. Unlike traditional loans, you don't receive funds until you make all your payments.
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Credit card payments for utility bills can help build your credit score
Utility companies, including electric companies, generally do not report account information and payment history to the three major credit bureaus: Experian, TransUnion, and Equifax. Therefore, paying utility bills on time does not add positive information to your credit reports. However, consecutive late payments may be sent to collection agencies, which can negatively impact your credit score.
One way to ensure that your credit score benefits from paying utility bills is to use a credit card to make these payments. Since most credit card companies do report payments to the credit bureaus, you will receive credit each month you pay your credit card bill on time. However, some utility companies may charge a fee for processing credit card payments, and you will pay extra in interest if you do not pay off your credit card balance in full every month.
If you are unable to secure a credit card, you may request that a friend or family member adds you as an authorized user on their card. This will help build a new tradeline on your credit report and boost your payment history.
Another option is to use a financial app or a reporting service company to help report your utility payments to credit bureaus. Third-party companies like LevelCredit, Experian Boost, and eCredable Lift can send the bureaus your utility account information and payment history. A record of consecutive on-time payments can improve your credit score over time.
Additionally, credit builder loans can help you build your credit score. These loans are reported to the credit bureaus, and once you reach your credit amount, you can use the funds to pay your utility bills.
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Frequently asked questions
Electric companies do not report to the three major credit bureaus (Experian, TransUnion, and Equifax) unless the debt is sent to a collection agency.
Your credit history can impact the ease of getting utility services. A better credit history can make it simpler to get services.
If you don't pay your electricity bill, your electricity service may be disconnected. Additionally, late payments may be reported to credit bureaus if the debt is sent to a collection agency, negatively impacting your credit score.
