improve your credit score using utility bills

Improve Your Credit Score By Using Your Utility Bills

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

Like we said above, most utility companies don’t report your good payment history to credit bureaus.

But now 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.

Good Payment History = Deposit Waiver

If you are looking to improve your credit score, you may be applying for credit, like when you apply for new electricity service.

If that’s the case, here’s another way your good utility payment history can help improve your credit, at least with the power company! It’s called a Letter of Credit Deposit Waiver.

Let’s say you have applied for service with an electricity company and a deposit is required. Always ask if you can provide a Letter of Credit. Most electricity companies will waive your deposit if you can show that you have a good payment history.

What’s a good payment history? Not more than 2 late payments, and no disconnects in a 12 month period.

Due to the risk of fraud or forgery, most electricity companies require that the Letter of Credit comes to them directly from your old electricity company. And, your old electricity company is required to provide this for you.

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

No Deposit Electricity

If you’re looking to improve your credit score, you also may be looking for no deposit electricty.

Unfortunately if you have bad credit, it’s the never ending cycle. If you haven’t improved your credit score, you may have to pay a deposit to get electricity service.

But then you have to come up with $150-$300 for a deposit.

And if you don’t have the money, you end up using a credit card to pay that deposit, and maybe get further behind in your bills. Ugh!

Most electricity companies (at least in Texas) require a credit score of 580-600 to be approved with no deposit. And if you don’t have that minimum credit score and don’t have the time to improve your credit score, you may want to get No Deposit Electricity instead.

Well we are here to tell you the truth about No Deposit Electricity. It’s a trick, pushed by compare power web sites and big power retailers. These traditional postpaid (meaning bill comes after you use the electricity) no deposit electricity plans are priced at a premium because of the risk the customer won’t pay their bill.

If you don’t want a credit check, and you go for one of those No Deposit Electricity Auto Pay plans you will end up with a rate that is significantly higher than the going rate — like 50% higher!

Why should you have to pay more for electricity just because of your credit score? There’s a better way to have no credit check and no deposit electricity. And it will help you establish a good payment record and possibly improve your credit score. Compare No Deposit Electricity in Texas and learn about your options.

No Credit Check Electricity

Prepaid electricity is the way to go if you want no deposit electricity.

Prepaid power or pay-as-you-go power has gotten a bad rep. And it’s no wonder, as most prepaid electricity plans charge you one rate for the first month, then steadily increase your rate without you realizing it.

That’s why we recommend Payless Power’s SmarTricity Premier 12 Saver plan to anyone with bad credit. There are two reasons we recommend it.

  1. It’s a fixed rate plan. No tricks, no gimmicks. You’ll pay the same price per kWh every month for 12 months.
  2. You’ll get a clean payment history. At the end of the 12 months, you could have a perfect payment history. Then use that letter of credit to get no deposit electricity service at any electricity company. Or use your good payment to improve your credit score through Experian Boost.

Read our Payless Power SmarTricity Premier 12 Review to find out more about this great product.

Shop No Deposit No Credit Check Electricity in Texas

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, Resulting in Multiple Inquiries. Every time you apply for a new credit card, it creates a hard inquiry on your credit report. 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. You can receive a free credit report annually from any of the three major credit bureaus. Discover Financial also offers a free credit scorecard, regardless of whether or not you have a Discover card.