Improve Credit Score with Utility Bills

Improve Your Credit Score By Using Your Utility Bills

  • Written By: Shannon Bedrich

  • You want to improve your credit score and you pay all your utility bills on time. But the reality is, most utility companies don’t report good payment history to the credit bureaus. They only report to the credit bureau when you don’t pay your bill.

    But there are ways to improve your credit score using your utility bills. And there are ways to get no deposit electricity or no credit check electricity without paying too much.

    Get Credit For Paying Your Utility Bills

    Experian (one of the major credit bureaus along with Transunion and Equifax), has created a way to get the credit you deserve.

    You can improve your credit score by factoring in your on-time utility and cell phone payments. It’s called Experian Boost.

    Experian recognized that most consumers pay their utility and cell phone bills on time. After all, electricity, water and cell phones are a critical part of our modern life and you don’t want to get shut off!

    Getting credit for your on-time utility bill payments is easy. Here’s how.

    How to Improve Your Credit Score with On-Time Utility Bill Payments:

    1. Sign Up for Experian Boost

      It’s free to sign up for Experian Boost.

    2. Review Your Credit Report and Credit Score

      As part of your free Experian membership, you will receive a free credit report and FICO Score immediately.

    3. Link Your Bank Account

      Link your bank account to Experian Boost and identify your utility accounts. Experian will access your utility and cell phone payment history

    4. Verify Data

      Experian will create a payment history from your bank account. You’ll verify the data and confirm that you want it added to your credit file.

    5. Get Updated Credit Score

      After you approve adding your electricity and phone payments to your file, you will get an updated FICO score in real time.

    How much can Experian Boost impact your credit score? Check out the stories online at #BoostAmerica. Depending on the utility bills you add and your on time payment history, you could improve your score by 2 points to 15 points or more.

    improve credit score woman checking her credit
    Your utility bills (like electricity and phone) can help improve your credit score.

    Top 7 Ways to Improve Your Credit Score

    In addition to the information outlined above, here are the top 7 ways to improve your credit score, according to Experian.

    1. Pay Your Bills on Time. One of the biggest ways you can improve your credit score is to pay your bills on time.

    2 Pay off Debt and Keep Balances Low on Credit Cards and other revolving credit.

    3. Keep Your Credit Utilization Ratio below 30%. This is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. Lenders like to see a credit utilization rate of 30% or less.

    4. Open New Credit Accounts Only as Needed. Do you really need another department store credit card?

    5. Don’t Close Unused Credit Cards. Keeping unused credit cards open—as long as they’re not costing you money in annual fees—is a smart strategy, because closing an account may increase your credit utilization ratio.

    6. Don’t Apply for Too Much New Credit. Doing this will result in multiple inquiries. Every time you apply for a new credit card, it creates a hard inquiry on your credit report. And too many hard inquiries can lower your credit score.

    NOTE: Electricity companies use a soft credit check. Applying for electricity service will not hurt your credit.

    7. Check your credit report regularly. If there’s inaccurate information, it could pull down your credit score. You can dispute information on your credit report and get it corrected. In addition, you can receive a free credit report annually from any of the three major credit bureaus.

    Good Payment History = Electricity Deposit Waiver

    If you are looking to improve your credit score, you may be about to purchase a house or make a move.

    If that’s the case, here’s another way your good utility payment history can help you avoid paying a deposit for your utilities! It’s called a Letter of Credit Deposit Waiver.

    Since you are researching ways to add your utility payment history to your credit score, it’s likely you can easily get a letter of credit. Every electricity provider in Texas will waive your electricity deposit if you can show good payment history. Good payment history for electricity means not more than 1 late payments, and no disconnects in a 12 month period.

    Due to the risk of fraud or forgery, electricity companies require that the Letter of Credit comes to them directly from your old electricity company. So the next time you move, apply to any electric provider for service. Then get a letter of credit sent over from your old company (they’re required to do this for free). Your new company will waive your deposit.

    Shop Texas Electricity Plans Near You

    About Shannon Bedrich

    Shannon Bedrich, co-founded ElectricityPlans in 2016 after shopping for electricity rates using a confusing state-sponsored website. A CPA and our CFO, Shannon is the one that deciphers the fine print on each electricity plan. Outside of work, Shannon enjoys spending time with family, rooting for the Aggies, and exploring all that Houston has to offer.

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