What Bills Help Build Credit? | Capital One (2024)

December 19, 2023 |4 min read

    You may know that credit scores are based largely on how you’ve handled things like loans and credit cards. But according to the Consumer Financial Protection Bureau (CFPB), paying your utilities, rent and cell phone bills could also be a factor.

    When it comes to credit scoring, those types of payments provide what’s known as alternative data. If alternative data is reported to credit bureaus, paying bills on time can help build credit. Keep reading to learn how.

    Key takeaways

    • Paying utilities, rent and cell phone bills can help build credit if they’re reported to the credit bureaus.
    • If certain bills aren’t reported to the credit bureaus, you can consider using a third-party service to report your payments.
    • Payments for mortgage, credit card and installment loan bills could also help build credit, if they’re made on time and reported to the credit bureaus.

    Does paying phone, rent and utility bills help build credit?

    If you keep up with your utility, rent and phone bills and that activity is reported to credit bureaus, it could help boost your credit. That’s because your payment history is an important factor when it comes to your credit scores.

    Remember, whether it’s a credit card bill or a phone bill, it’s important to stay current with what you owe. Late, missed or delinquent payments can negatively impact credit scores and creditworthiness.

    How do utility, rent and phone bill payments appear on my credit reports?

    Alternative data isn’t as common as traditional factors used to judge credit. But if it’s reported, it’ll appear on your credit reports as something called a tradeline. Tradelines include account information like payment history, account status, account activity and account history.

    What if my utility, rent and phone bill payments aren’t reported to the credit bureaus?

    You might be able to use a service to report payments to credit bureaus. Some things to keep in mind:

    • Reporting services may charge a fee.
    • They may not report to all three major credit bureaus: Equifax®, Experian® and TransUnion®.
    • Once the bill payments are included in your credit reports, they’ll help you build credit only if you pay them on time each month.

    How do cell phone, rent and utility bill payments affect credit scores?

    Assuming cell phone, rent and utility payments are reported to credit bureaus, that information could affect credit scores in various ways. The CFPB says credit scores are typically based on factors like payment history, number and types of balances, credit use and the age of credit accounts.

    It even depends on which credit-scoring company calculated the score and which formula, called a credit model, they used to do it. Only some scoring models take alternative data into account. VantageScore, for example, incorporates alternative data like utility payments and rent into its VantageScore 3.0 and VantageScore 4.0 models. More recent FICO® scoring models, such as FICO 9, do too. But FICO’s most popular model, FICO 8, doesn’t.

    Can late phone, rent and utility bill payments affect credit?

    It’s possible that getting behind on payments can lower credit scores even if the bills aren’t being reported regularly.

    Depending on how far behind payments get, the account could be turned over to a collections agency. The debt collector could make a negative report to the credit bureaus. Collections activity can stay on a credit report for seven years and sometimes longer, according to the CFPB.

    You can learn more about how debt collections work from the CFPB.

    What other types of bills can you pay to build your credit?

    Some other monthly bills that, if paid on time and reported to the credit bureaus, could help you build credit include:

    • Credit card payments, including secured credit cards and student credit cards
    • Installment loans like student loans and auto loans
    • Mortgages
    • Credit-builder loans

    What bills help build credit in a nutshell

    Paying cell phone, rent and utility bills can help you build credit if your on-time payments are reported to the credit bureaus. But even if they’re not directly impacting your credit, it’s a good idea to pay all your bills on time if you can. It’s a key part of financial responsibility, and it might help you avoid late fees or penalties and loss of service.

    To make sure your credit scores are moving in the right direction, you can get a free copy of your credit report from each of the three major credit bureaus. Visit AnnualCreditReport.com to learn how.

    Another way to monitor your credit is by using CreditWise from Capital One. With CreditWise, you can access your TransUnion credit report and VantageScore 3.0 credit score without hurting your credit. CreditWise is free for everyone, even if you’re not a Capital One customer.

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