Do utility bills affect your credit score?

Discover when your utility bill payments will affect your ability to successfully apply for credit.

Updated

Fact checked

If you’re wondering whether utility bills affect your credit score, the answer is: it depends.

Energy suppliers will each follow different standards when it comes to reporting information to credit reference agencies. What’s more, the UK’s three major credit reference agencies (Experian, Equifax and TransUnion) will each process this information differently to create your credit score.

The best way to find out what’s affecting your credit score is to request a copy of your credit report. You can get a free copy from any of the UK’s three major credit reference agencies.

What could be recorded on my credit file?

It’s rare for timely utility bill payments to be passed on to credit reference agencies, as utility bill accounts aren’t regarded as credit accounts.

However, missed payments are more likely to be reported to credit reference agencies. In this case, it would be logged on your credit file for up to seven years.

If your utility provider takes legal action to retrieve money owed to it, this can lead to defaults or CCJs, which definitely will be logged on your credit file. If you fall into serious debt that results in an IVA or bankruptcy, this will also be logged.

How could it affect my chances of getting a loan or credit card?

A missed utility bill payment may harm your credit score. This figure is considered by lenders when assessing how risky it would be to lend money to you. The higher your credit score, the easier it is to be approved for the best loans and credit cards.

Remember, each credit reference agency calculates your score using different algorithms. However, serious “red flags” logged on your credit report, such as defaults and CCJs, are more likely to do serious damage to your credit score.

Some lenders will flat-out refuse to work with applicants who have certain red flags on their credit files. Others will still accept an application, provided the applicant’s overall credit score is still healthy.

If your credit score is poor, it’s often recommended to rebuild it before applying for a large loan or credit card.

Dos and Don’ts

Do

  • Pay your utility bills by direct debit. This reduces the chances of missing a payment, plus many utility bill providers offer a discount when you pay this way.
  • Tell your provider if you’re likely to miss a payment. Often, you’ll be given the opportunity to negotiate a more affordable payment schedule.
  • Shop round for the cheapest energy provider. Many customers can save hundreds of pounds a year by switching to a better deal.

Don’t

  • Fall behind on bill payments unless you absolutely can’t help it. Even if there is no impact on your credit score, your provider may fine you or shut off your power supply.
  • Ignore warnings about overdue bills. The longer you wait to pay, the more damage it could do to your credit score. It could also result in legal action being taken against you.

Frequently asked questions

The bottom line

The impact of your utility bills on your credit score depends on your energy provider and what credit reference agency is used by lenders you apply to in the future.

Nevertheless, in every imaginable scenario, it is extremely useful to pay your utility bills on time and avoid falling into arrears.

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