What Bills Help Build Credit?

Tara Seboldt
Jul 15, 2022

You probably have a handful of bills you have to pay each month. Your rent, utilities, and car loan all require payments to stay in good standing. But do these payments affect your credit score?

If so, what bills help build credit?

This article takes a look at how paying your bills affects your credit history—and what you can do to get credit for paying bills on time.

What Makes a Credit Score?

We can’t determine what bills help build credit until we know how credit scores work. So, let’s first take a look at what goes into a credit score. And more importantly, who’s creating your score.

Credit scores are three-digit numbers that help the lender determine your creditworthiness.

Your FICO score is made up of five factors:

  • Payment history
  • Credit utilization rate, or how much of your available credit you’re using
  • Length of credit history
  • Mix of credit accounts
  • New credit accounts

Another popular scoring model, known as VantageScore, uses similar categories to create your credit score.

But where does the data for your FICO or VantageScore credit score come from?

The answer is from the three major credit bureaus or credit reporting agencies: Experian, TransUnion, and Equifax. These credit agencies create your credit report using data from lenders. You can get a free credit report from each agency once per year at AnnualCreditReport.com.

The credit reporting and scoring process looks like this:

  1. You pay a bill to your lender.
  2. Your lender then reports your payment information to the credit bureaus.
  3. The bureaus gather all of your data into your credit file.
  4. These credit reports go to the scoring agencies.
  5. The scoring agencies use this data to calculate your score.

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Who Decides if a Lender Reports a Bill?

Your lenders determine if you get credit for paying a bill. Lenders aren’t required to report your payments to the major credit bureaus.

If your lender does report your payments and account information to the credit bureaus, you can potentially build credit with your bills. If your lender doesn’t report your payments, your on-time payments won’t show up on your credit history.

Late Payments to Non-Reporting Lenders

Are there times when a lender who doesn’t report to the credit bureaus might decide to?

Yes

Unfortunately, this usually means your creditor is reporting a late payment. Many accounts that aren't usually reported to credit bureaus can end up on your credit report if you miss your due date. In some cases, this reporting is required by law.

Your creditor might send your overdue bill to a collection agency. Debts in collections often show up as negative information on your credit report.

That’s why it’s always important to make your payments on time—even if your lender doesn’t usually report them.

Does a Phone Bill Build Credit?

Your cell phone bill won’t usually build credit. Most cell phone and traditional telephone companies don’t report payments to the credit bureaus.

What if you’re buying your phone on a payment plan? Does that build credit?

Not usually. 

Cell phone payment plans are often seen as “rent-to-own” agreements rather than a traditional credit account. Since it’s not a credit account, it’s unlikely that your phone company will report it.

Does Paying Utilities Build Credit?

Utilities include a range of services to help your home stay comfortable, such as electric, gas, and even internet service.

Like your phone bill, utilities are usually considered a service instead of a credit account. Your utility payments probably won’t help your credit score.

You might be wondering why your utility bill doesn’t build credit. After all, your utility company might have requested a credit check to open your account.

While utility companies often run a credit check for new customers, it’s just a way to check if you’re likely to pay your bills. If you have a consistent payment history for credit cards or loan payments, your utility company will feel more confident you’ll pay for your electric or other services.

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What Bills Do Help Build Credit?

In general, any bill that’s part of a credit account should be reported to the credit bureaus and help you build credit. These accounts usually involve borrowing money from a lender.

For example, a mortgage payment usually goes on your credit report. Rent payments, on the other hand, do not. That’s because your mortgage is a type of loan while your rent payment is not.

Common bill payments that build credit include:

  • Mortgage payments
  • Auto loans
  • Car leases
  • Personal loans and lines of credit
  • Home equity lines of credit
  • Student loans
  • Credit card bills

Ways to Have Your Bills Count

Your utility company or landlord may not report your payments, but you might still be able to get credit for paying your bills. There are a few workarounds or alternatives to help you get credit for managing your money.

Sign Up for a Credit Reporting Service

Credit reporting services let you get credit for non-credit payments. Depending on the service, you might be able to build credit through rent payments, utilities, or even streaming service payments.

For example, credit bureau Experian offers Experian Boost. This program could help you build good credit by reporting payments on Hulu, Netflix, AT&T, and Verizon bills.

Credit reporting services aren’t always reliable, however. Some credit scoring models don’t take these new reports into account when calculating your score. Also, not all services report to all three bureaus.

Pay Your Bills with a Credit Card

Another way to get credit for paying your bills is to charge them to a credit card.

This might seem counterintuitive, but it works if you use credit responsibly. Specifically, you’ll need to commit to paying your credit card bill on time in full. You’ll also need to make at least the minimum monthly payment to your card balance.

You can make this easier by opening a credit card that you only use for paying normal bills.

For example, you get a credit card to pay your cell phone, car insurance, and electric bill. These are costs you already have, so you’re not overspending on your card.

At the end of the month, you simply pay your credit card bill in full using the money you would normally use to pay these bills individually. (Even better if you set your credit card to autopay.)

If you have bad credit and don’t know if you can get a card, you may need to consider a secured card. Secured cards use a cash security deposit to open the account. Your refundable deposit is often the same as the limit on your credit line.

Another option is the Possible Card. This new option from Possible is interest-free, doesn't charge late fees, and helps build your credit history without holding your current credit score against you.

Pros and Cons of Paying with a Credit Card

Paying your bills with a credit card comes with a lot to consider. There are pros and cons to using a credit card, especially if you’re building your credit score.

Pros

  • Could help you get credit for bills you’re already paying
  • Only one monthly payment to your credit card issuer
  • Some cards earn rewards like cash back
  • You won’t have to write or mail checks for your bills

Cons

  • You could hurt your score if you don’t pay your credit card bill on time
  • There may be fees to pay with a card
  • You’ll have to pay interest if you don’t pay your balance in full each month
  • It might be too easy to spend on things other than your bills

It would be nice to have all of your monthly bills count toward your credit score. Unfortunately, most regular, non-credit bills aren’t reported to the credit bureaus.

The Bottom Line

The best way to build your credit history is to open a credit account that you can comfortably manage.

As you use your credit wisely, you’ll start to see your credit score improve over time—even without credit for your regular bills.

Tara Seboldt

Tara is a financial writer with over five years of professional writing experience. She previously worked at a financial planning firm. Tara uses this professional experience to help readers better understand their finances and make smart financial moves. When she’s not writing about money, Tara enjoys spending time in the Idaho mountains hiking, camping, and skiing.

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