Does a phone bill hurt your credit?
Cellphone providers typically don't report your on-time bill payments to the credit bureaus, but they may report negative information like missed payments. There are ways to get credit for cellphone payments, such as signing up with a third-party service that reports to the credit bureaus.
Phone bills for service and usage are not usually reported to major credit bureaus, so you won't build credit when paying these month to month. However, through certain credit monitoring services, you can manually add up to 24 months of payment history to your report.
You may know that credit scores are based largely on how you've handled things like loans and credit cards. But according to the Consumer Financial Protection Bureau (CFPB), paying your utilities, rent and cell phone bills could also be a factor.
Often, this results in a soft inquiry if you're using a BNPL or buying the phone from the carrier, which doesn't affect your credit scores. But if it leads to a hard inquiry, which generally happens when you apply for a new credit card or personal loan, that might hurt your credit scores a little.
Late payments remain on a credit report for up to seven years from the original delinquency date -- the date of the missed payment. The late payment remains on your Equifax credit report even if you pay the past-due balance.
You may be unable to make or receive calls, your mobile provider must warn you before they interrupt or disconnect your service. Your mobile phone provider can also cancel the contract and take steps to recover the money they are owed, this can include passing your debt on to a debt collection agency.
You still can qualify for a mortgage if your DTI ratio is higher, but you might have to pay a higher interest rate. Are all of my monthly bills considered debt? No. Everyday expenses like groceries, utilities, cell phone bills, cable bills, car insurance, and health insurance are not factored into the calculation.
- Highlights:
- Making a late payment.
- Having a high debt to credit utilization ratio.
- Applying for a lot of credit at once.
- Closing a credit card account.
- Stopping your credit-related activities for an extended period.
- Paying your loans on time.
- Not getting too close to your credit limit.
- Having a long credit history.
- Making sure your credit report doesn't have errors.
A 650 credit score is generally considered “fair.” A score in this range may limit you from certain financial opportunities. Payment history, monitoring your credit and lowering your credit utilization ratio can be helpful ways to improve this score over time.
What is the quickest way to build credit?
- Consider a secured credit card.
- Look into a credit-builder loan.
- Find a co-signer.
- Become an authorized user.
- Don't overspend.
We run a credit check to verify your identify and determine eligibility for service financing. Your security is our priority. We have enhanced our processes to protect your identity when running a credit check.
For a score with a range between 300 and 850, a credit score of 670 to 739 is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2023, the average FICO® Score☉ in the U.S. reached 715.
The Takeaway
With rent, phone bills, electric bills, and other utilities, on-time payments or one late payment typically won't make any difference to your credit score, because they're not considered credit accounts by the three major credit bureaus.
Only those monthly payments that are reported to the three national credit bureaus (Equifax, Experian and TransUnion) can do that. Typically, your car, mortgage and credit card payments count toward your credit score, while bills that charge you for a service or utility typically don't.
Under the Fair Credit Reporting Act (FCRA), most negative information, including unpaid credit card debt, must be removed from your credit report after seven years. This seven-year period typically begins 180 days after the account first becomes delinquent.
All debts have a statute of limitations. These statutes are typically set by state governments, but phone bills are different. Cell phone debt has a federal statute of limitations of two years. After the statute of limitations has expired on a debt, it is considered “time-barred.”
If a bill is unpaid, firms usually contact the customer. If you do not pay, your provider might restrict your account. This could mean outgoing calls are restricted to emergency calls and calls to the provider only, while inbound calls are unaffected. You might be disconnected if payments continue to be missed.
Some utility providers will terminate service as early as one week after the bill's due date and require a hefty amount of money to restore these services. Other companies, like phone providers, may shut off service anywhere between 45 to 60 days after the bill is due.
Mobile phone debt often goes to a debt collection agency. Do not ignore their letters. Offer to pay what you owe at a rate you can afford. These agents do not have any special powers.
What is a healthy amount of debt?
Key takeaways
Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
Mortgage lenders want to see a debt-to-income (DTI) ratio of 43% or less. Anything above that could lead to the rejection of your application. The closer your DTI ratio is to that percentage, the less favorable your mortgage terms are likely to be. A Home Purchase Worksheet can help you determine your DTI ratio.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
- Review Your Credit Reports. The best way to identify which steps are most important for you is to read through your credit reports. ...
- Pay Every Bill on Time. ...
- Maintain a Low Credit Utilization Rate. ...
- Avoid Unnecessary Credit Applications. ...
- Monitor Your Credit Regularly.
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.
