If you’ve been working hard to build your credit score by making wise financial decisions and paying your bills on time, it may come as a surprise that some of those timely payments may not be impacting your credit score at all.
“Traditionally, credit scores are not impacted by utility, phone and cable TV bills unless they are severely delinquent,” explained Rod Griffin, director of consumer education and awareness at Experian.
Utility and other similar providers typically do not report positive payment information to the three national credit bureaus — Equifax, TransUnion and Experian — which is why this information is not usually included in your credit report or factored into your credit score. But Experian recently launched a new program, called Experian Boost™, that gives individuals more control over their credit scores by self-reporting these positive payments.
The Open Door Coalition spoke to Griffin to learn more about how Experian Boost works, and how you can leverage your utility, phone and internet bills to improve your credit score.
Timely payments are the No. 1 factor that goes into calculating your credit score, so the first step toward getting your utility payments to work in your favor is to make sure they are paid on time.
While positive payments on these types of accounts are not automatically reported to credit bureaus, delinquent accounts are, said Griffin. “If you’re late on a utility, phone and/or cable TV bill, your provider may report late payment information to Experian, and it would show up on your credit report in the form of a collection.”
For credit agencies to be notified of your delinquent account, it must be more than 30 days past due, he said. For instance, missing a payment by a few days or a couple weeks may be considered overdue by the provider and result in late fees or penalties, but if a payment is made before the 30-day mark, it should not impact your credit.
However, remember it’s always best to pay all your bills on or before the due date to be certain it doesn’t hurt your credit.
Once you’ve established a good history of on-time cell phone, internet, cable and utility payments, you can sign up for the free Experian Boost program to report these payments to Experian directly.
How does it work? Griffin said to start the process, simply visit Experian.com/Boost. Once you’ve activated your free Experian membership, you will be asked to sign in to the online checking or savings account you use to make monthly telecom and utility payments.
“With the consumer’s permission, Experian Boost will securely connect to their accounts and identify their positive monthly payments,” he said. “Once a consumer verifies the information is correct, the positive payment history is added to their Experian credit report and an updated credit score is shared immediately. The whole process takes about five minutes.”
While some third-party programs for reporting utility and rent payments exist (such as SimpleBills and RentTrack), Experian Boost is completely free and instantly gives you a recalculated credit score.
“This is the first-time consumers can add positive information directly to their credit report,” said Griffin. “With Experian Boost, consumers are in complete control. They can decide when to contribute their positive telecom and utility payments to their Experian credit report and when they’d like the information removed.”
It’s important to note that these positive payments are tied to your Experian credit report, and thus will only impact credit scores pulled using Experian data.
“If a consumer enrolls in Experian Boost, the positive payment histories are only added to their Experian credit report,” Griffin explained. “If a lender does not pull an Experian credit report, Experian Boost will not be factored into their decision.”
So in order to get the most benefit from the program, Griffin said consumers can ask their lenders to pull their credit report from Experian when applying for a new account.
“Your credit scores could mean the difference between hundreds and even thousands of dollars in savings,” he said. “Having a ‘good’ credit score, or a score of 700 or greater, can unlock many opportunities including lower interest rates on loans, access to better credit cards and smaller down payments. Additionally, high credit scores could mean lower security deposits on rentals and utilities and lower insurance rates.”