How to Get Credit For Paying Monthly Utility Bills On Time

Did you know that the average credit score in the US hit an all-time high of 718 in October 2023? According to FICO, 718 falls under the “good” credit category, which ranges from 300 to 850. 

Most Americans have been able to manage their credit score pretty well, the lowest average being 680 in the Gen Z (18 to 26) and the highest being 761 in the Silent Generation (78+) category. 

While this decent credit score may come as a surprise to many, given the high cost of living and interest rates in the US, the FICO report stated that the country’s strong job market, medical debt removal, and slowing inflation have helped.

Why Having a Good Credit Score is Important? 

Any credit score that falls between 740 and 799 is considered very good. Roughly 25% of all Americans fall into this range. 

A good credit score will help you in more ways than one. It will help you get favourable interest rates for mortgages, car loans, and personal loans. Lenders use credit scores to assess the risk of lending money to individuals, and a higher credit score indicates lower risk. 

In addition to this, credit card companies also use credit scores to evaluate applicants. A good credit score increases the likelihood of approval for credit cards with higher credit limits and generous rewards. For example, only individuals with higher credit scores (670-700) can avail of a premium American Express travel card loaded with excellent features and benefits. 

Landlords often check credit scores as part of the rental application process. A good credit score can make it easier to secure a lease, as it demonstrates financial reliability. 

In some states, insurance companies use credit scores to determine insurance premiums. A good credit score may lead to lower premiums for auto, homeowners, and renters insurance.

Overall, a good credit score is essential for financial stability and flexibility in the US. 

“I generally think of a good credit score as about 670 to 739, and excellent credit as 740 plus,” he said. “Every 20 points or so can make a big difference in the battleground between fair, good and excellent credit,” Bankrate senior industry analyst Ted Rossman told CNBC. 

Can You Improve Credit Score With Utility Bills?

Yes, it is possible to improve your credit score via utility bills. 

Your credit scores are largely the result of how you have handled your financials, loans and credit cards.

According to the Consumer Financial Protection Bureau (CFPB), other alternative data such as paying your utilities, rent and cell phone bills can also be taken into account to determine your credit score. 

So, if you are responsible with your utility, rent and phone bills, the credit bureaus will consider your payment history and this will help boost your credit. It is important to note that not all utility bills will have a direct impact on your credit score. 

However, if you become reckless with your utility bills, the utility companies could report these delayed payments to the credit bureaus. 

How to Improve Your Credit Score With Utility Bills

Utility bills include bills for gas, electricity, telephone, cable, internet, and water, among others. Here are some steps you can take to ensure your timely utility payments contribute positively to your credit: 

Start by checking if your utility provider reports payments to the credit bureaus. If they do, ensure that your account is set up to be reported accurately. If your utility company does not report to the major credit bureaus, you can explore alternative credit reporting services. Some companies, like Experian Boost or UltraFICO, allow you to add alternative data, such as utility payments, to your credit file to potentially boost your score.

Ensure that the utility accounts are in your name rather than someone else’s. Having accounts in your name allows your payment history to be associated with your credit profile.

Be consistent with paying your utility bills. Late payments can negatively impact your credit score. Set up automatic payments or reminders to ensure you never miss a payment.

Regularly monitor your credit report to ensure that your utility payments are being reported accurately. 

Some financial institutions offer credit builder accounts that allow you to build credit by making regular payments, similar to instalment loans. These accounts may include utility payments as part of the payment history reported to credit bureaus.

In addition to utility payments, maintain other aspects of good credit behaviour, such as keeping credit card balances low, paying bills on time, and avoiding opening multiple new accounts in a short period.

Also Read: 5 Ways to Improve Your Credit Score While in College 

Build Experian/FICO Credit Scores for Free

Vola enables users to boost their Experian/FICO credit scores at no cost by reporting their rental payments. All you need to do is submit a snapshot of your payment receipt or bank statement, which Vola then forwards to credit bureaus through our partner, Esusu

In addition to credit-building services, Vola will also help you supplement your bank by sending money to prevent overdrafts. We will help you find smart savings strategies and build your credit score enhancement. 

Our innovative and unique algorithm advances your paycheck and better yet – lets you build up your score as you pay back your Vola advances.

Incorporating these practices into your routine will set you on the path to achieving a stronger credit score and greater financial independence. Always prioritize staying current on your financial obligations, whether it’s a credit card bill or a phone bill. 

It’s important to recognize that achieving excellent credit scores is a gradual process that requires consistency and patience. 

Just like Rome wasn’t built in a day, exceptional credit scores are cultivated and preserved over time through responsible financial management.

Also Read: A Beginner’s Guide: How Do Credit Card Rewards Really Work? 

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