Do utility bills affect your credit score?

The things that can influence your credit score aren’t always obvious. And among the everyday expenses that sometimes feel like a grey area are utility bills.

After all, things like electricity and phone bills are paid regularly each month, so they should count towards your credit score, right? Well, it’s not so straightforward.

Utility bills and your credit report

Unlike credit cards or loan payments, which are reported to the credit reference agencies and appear on your report, utility bills have a more selective presence.

That’s because most utility companies don't routinely report your payment history to the likes of Experian, Equifax, and TransUnion.

So, consistently paying your gas, electricity, or water bills on time might not influence your credit score like traditional forms of credit would. But this doesn’t mean you should view them as being less important. Here’s why:

How missed utility bills could affect your credit score

If your utility bill payments are reported to the credit reference agencies, there are a few ways missed payments could impact your credit score.

• Missed payments: If you fall significantly behind on utility payments, your provider might apply to register a default on your credit file or pass your account to a debt collection agency. This can stay on your report for six years and could significantly impact your credit score and future borrowing opportunities.

• County Court Judgments (CCJs): In severe cases where utility debts remain unpaid, your provider might take court action against you to get their money back. A CCJ will appear on your credit report and can make it much harder to get approved for credit, mortgages, or even rental properties.

• Debt management arrangements: If you enter into a formal debt management plan or Individual Voluntary Arrangement (IVA) that includes utility debts, this will be recorded on your credit file and will negatively influence your score.

The best way to keep your credit health in check is to know where you stand. Monitor your credit score and understand the things that are affecting it with your credit report.

At Checkmyfile, we put your information from Experian, Equifax, and TransUnion in one place, so you see everything a lender could see. It’s the most detailed credit report you can get. Start with a 30-day free trial, then it’s a paid monthly subscription – cancel online anytime.

The growing trend of reporting

It’s becoming more common for utility companies to report your payment history to credit reference agencies.

For example, some mobile phone providers now report your monthly contract payments to credit reference agencies. This means that consistently paying your phone bill on time could actually help improve your credit score.

There are also credit builder services, for people with little or no credit history, that allow you to connect your bank account to demonstrate regular bill payments, including rent and utilities, which can then be factored into your score.

What if you're struggling with utility bills?

If you're having trouble keeping up with utility payments, don't panic – but do take action quickly. Here's what you can do:

• Contact your provider immediately: Utility companies can help to set up payment plans or temporarily reduce payments if you're experiencing financial difficulties. It’s important to get in touch before you fall behind, not after to avoid an impact to your credit health.

• Seek independent debt advice: Organisations like Citizens Advice or StepChange can provide free, impartial guidance on managing utility debts and protecting your credit score.

Know where you stand

While utility bills might not always directly affect your credit score like credit cards or loans, they are a crucial part of your overall financial wellbeing. Managing these bills responsibly helps maintain broader credit health, as missed or late payments can have consequences that reach beyond simply keeping your energy supply running.

Staying consistent and reliable across all your financial commitments, including utility bills, is essential for protecting and building a positive credit history. Regularly monitoring your credit report can help you understand how various factors, like on time utility payments, come together to influence your credit health and opportunities.