Building credit by paying phone bill, rent
Mobile phone service providers and landlords typically do not report payment information to credit bureaus, but they don’t face as many regulatory barriers as utility companies. Many in the credit reporting industry believe more data on rent and cellphone bill payments could help consumers build or improve their credit. However, Experian’s Griffin said some consumer advocates are concerned that reporting this information could hurt those who don’t always pay their bills on time.
“We think the positive impact outweighs the potential negative impact for some consumers,” he said. “If you don’t pay your cellphone bill and it goes to collections, it will be reported anyway.”
Griffin said cellphone providers’ embrace of bill payment reporting may simply be a matter of them getting more comfortable with the process. Meanwhile, there are now online services, such as RentTrack, RentPayment and Rental Kharma, that allow consumers to have their on-time rental payments reported to the bureaus. TransUnion and Experian also have their own services that property managers and landlords can use to report renters’ payment histories.
“We encourage people to talk to their landlords and have them report that information, especially if you’re trying to establish credit for the first time or rehabilitate a credit history that’s had some problems,” Griffin said.
Pay what you owe – furnisher or not
No matter who you’re indebted to, it’s important to be a faithful payer. A missed credit card or loan payment can stay on your credit report for up to seven years. Even though a friend or family member can’t report you to a credit bureau, failure to pay back a personal loan can ruin the relationship and even trigger a lawsuit, which can affect your credit.
“If you lose a lawsuit and therefore have a judgement against you, that can certainly appear on a credit report,” Ulzheimer said.
If you always pay your rent and electricity, cellphone and cable bills on time, keep up the good work. It could eventually boost your credit score.