How Not Paying Cable Bills Could Hurt Your Credit Score

Some of the bills you pay are reported to credit bureaus and others not. Your payments on credit cards, mortgages and other loans, for example, are reported monthly, so paying them on time can help increase or maintain your credit score.

Utility bill payments, including those for cable TV and cell or landline phone service, are generally not reported unless they become seriously delinquent and are sent to collections– a gesture that can have a serious negative effect on your credit score.

Key points to remember

  • Cable TV, phone, and other utility bills aren’t usually reported to credit bureaus or reflected in your credit score.
  • However, if you are seriously behind in paying your cable bill, it may show up on your credit report.
  • You can request that your utility payments be included in your credit report if you want to show that you pay your bills on time.

Exceptions to the rule

There are, however, a few exceptions. FICOthe company behind the most widely used credit score models, offers a score, called FICO XD 2, which takes into account some non-traditional data, such as utility payments. The goal is to create credit scores for consumers who might otherwise not have enough data on file, so that potential lenders can assess their creditworthiness.

Consumers can also choose to have their utility bill payments reflected in their credit reports at Experian, one of the three major national credit bureaus, by signing up for the Experian Boost program and giving the company access to the payment history of its utility and telecom bills. A person might want to do this, for example, if they don’t have enough other accounts on their credit reports and they’re trying to establish a solid credit score by showing they pay their bills on time.

What is the value of a payment?

Payment history is the most important factor in your credit score. A basic FICO scorefor example, is composed of:

  • Payment history (35%)
  • Use of credit (30%)
  • Account age (15%)
  • Requests/new accounts (10%)
  • Composition of credit (10%)

The VantageScorea credit scoring model developed by the three major credit reporting agencies as an alternative to FICO, is based on similar criteria:

  • Payment history
  • Age and type of credit
  • Use of credit
  • Sale size
  • Requests/new accounts
  • Amount of credit available

VantageScore is opaque when it comes to the exact weight it assigns to each category. But that leaves no doubt about the importance of paying bills on time. A consumer’s payment history is the only factor that VantageScore ranks as “extremely influential.”

Late payments and your credit

All creditors want to know that a borrower will pay their debt as agreed. They use credit reports and credit scores retrospectively to assess the degree of risk a consumer is likely to pose. If a person has established a pattern of paying their bills on time, they are considered a responsible credit user and are not likely to cause financial loss to the creditor. Having a history of late payments, on the other hand, signals unreliability, financial instability, and increased financial risk.

The consequences of late payments worsen as the account becomes more and more delinquent. The consumer credit report shows the payment history with degrees of arrears: punctual, 30 days past due, 60 days past due, 90 days past due, 120 days past due. Each degree of delay causes greater and greater damage to credit score than the previous one.

Collection, recovery, imputations, bankruptcyand other ratings that signify a breach of financial obligation may also be listed, and they result in an even bigger hit to the consumer’s score than late payments.

As mentioned earlier, a cable or other utility bill will generally not be reported at all unless it is seriously overdue and in collection. This usually happens around 90 days after a missed payment. Before that, the consumer is likely to be hit with late fees and ultimately a suspension of service.

The longer you don’t pay a bill, the more it can hurt your credit score.

How long do late payments hurt?

Credit reports reveal payment history on all accounts (open or closed) they cover, but the impact of any particular late payment on your credit score will diminish over time. Recent and multiple late payments will hurt your score more than a single late payment that has faded from memory.

VantageScore further explains that the greatest damage is done to the consumer’s credit score in the first month after the late payment is reported. Then its impact diminishes over about two years, after which it ceases to have much effect (although the delay in payment remains within consumer record for seven years). If you have had several recent late payments on your credit file, one of the best credit repair companies may be able to repair the damage done to your credit score.

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