If I have a two-year contract with a cell phone company, and if I pay my cell phone bill on time in full every month until the contract is up, does that build my credit scores?
- CMR
Dear CMR,
The good news is that paying your cell phone bill on time can now help your credit scores!
In the past, on-time payments to service companies such as cellular telephone companies, electricity providers, and natural gas services were not reported to the credit reporting agencies.
Improve Your Score
However, Experian now has a new service called Experian Boost®ø that can help you improve your credit scores instantly by including your positive utility and cell phone payments in your Experian credit report. Those payments can then be factored into your FICO scores.
When you sign up for Experian Boost, you agree to give Experian permission to access the checking account, savings account or other demand deposit account through which you pay your bill each month.
Once you verify the information to be added is correct, Experian adds the payments from the service providers you specify — going back up to 24 months -- to your credit history. The service is free and includes a FICO8 score at the start of the process and provides you with an updated FICO8 score when you complete the process, so you can see how much your score was boosted.
The entire enrollment process takes only minutes. It is secure, and permission based. If you change your mind, you can have Experian stop collecting the positive payment information.
Unpaid Utility and Cell Phone Bills Can Hurt You
Keep in mind that although utility and cell phone companies have not reported positive information to the credit reporting companies, negative information could become part of your credit history. Failure to make your payments could result in your account being sent to collections, and the collection account could then appear on your report. Therefore, it is still important to make all your utility payments on time, even if you don't plan on adding that positive payment history to your credit report.
If you don't know what accounts are being reported for you, you may want to request a copy of your credit report from Experian at www.annualcreditreport.com.
Your Rent Payments Can Also Help Improve Your Score
Paying your rent on time may also help you build your credit history, if the lease payments are reported. Even a landlord with a single property can report their tenant's positive payments to Experian. If your landlord or leasing company does not report, you can also sign up to pay your rent through a service that reports the information to Experian.
You can find more tips for establishing a strong credit history on our blog.
Thanks for asking.
Jennifer White, Consumer Education Specialist