If you\u2019re wondering whether utility bills affect your credit score, the answer is: it depends.<\/p>
Energy suppliers each follow different standards when it comes to reporting information to credit reference agencies (CRAs). What\u2019s more, the UK\u2019s 3 major CRAs (Experian, Equifax and TransUnion) each process this information differently to create your credit score.<\/p>
The best way to find out what\u2019s affecting your credit score is to request a copy of your credit report. You can get a free credit report<\/a> from any of the UK\u2019s 3 major CRAs, either through getting a statutory report or using a free trial.<\/p> If you use a credit meter for your gas and electricity, your payment history could be recorded on your credit file. However, this depends on the supplier, as some don’t pass this information on.<\/p> Missed payments are more likely to be reported to CRAs than those made on time, but it\u2019s possible for both to be recorded. Missed payments can be logged on your credit file for up to 6 years.<\/p> If your utility provider takes legal action to retrieve money owed to it, this can lead to defaults or county court judgments (CCJs), which will be logged on your credit file. If you fall into serious debt that results in an individual voluntary arrangement (IVA) or bankruptcy, this will also be logged.<\/p> 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<\/a> and credit cards<\/a>.<\/p> Remember, each credit reference agency calculates your score using different algorithms. However, serious \u201cred flags\u201d logged on your credit report, such as defaults and CCJs, are more likely to seriously damage your credit score.<\/p> Some lenders 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\u2019s overall credit score is still healthy.<\/p> If your credit score is poor, it\u2019s often recommended to rebuild it before applying for a large loan or credit card.<\/p> It\u2019s good practice to make sure your bills are paid on time. But the exact details passed on to CRAs depend on your utility provider. Paying bills on time can help you build a positive payment history that lenders can see and help them determine you\u2019re a reliable person to lend to. <\/p> However, even if your credit score isn\u2019t going up because you\u2019ve paid your bills on time, remember that not paying them on time can damage your credit score. <\/p> Each time you miss a payment, it will likely be recorded on your credit file and can negatively impact your credit score. The more payments you miss, the worse it will get. Future lenders will see these missed payments, which could affect your ability to get credit in the future.<\/p> There are plenty of ways you can build up your credit score. For example: <\/p> The best way to ensure you pay your utility bills on time is to set up a direct debit. That way, the money will be taken out of your bank account automatically, so you won\u2019t need to remember. However, you\u2019ll need to ensure sufficient funds are in your bank account to meet the payments. <\/p> You can also take plenty of steps to reduce energy usage around the home and help lower your bills. For example, only run washing machines and dishwashers when they\u2019re full, draught-proof windows and doors and make sure your home is well insulated. <\/p> If you\u2019re struggling with your utility bills, it\u2019s crucial to speak to your suppliers as soon as possible. They will work with you to come up with a solution, which could include setting up a new, more affordable payment plan. <\/p> If you and your partner\u2019s or housemate\u2019s names are both on your utility bills, this could create a financial association between you.<\/p> This will be noted on your credit report. Although your own credit score won\u2019t be directly affected by the other person\u2019s, a financial association can mean the other person\u2019s credit history is considered along with your own when you apply for credit. If they have poor credit, this can reduce your chances of getting approved – even if you apply alone. <\/p> It\u2019s important to keep this in mind if you\u2019re thinking of having joint utility accounts. <\/p> If your name isn\u2019t on the bills, but you contribute towards them, the accounts won\u2019t appear on your credit report. This means your credit score won\u2019t be affected if payments aren\u2019t made, but it also means you won\u2019t get any of the positive benefits if the bills are paid on time. That\u2019s why it can be sensible to add your name to utility bills if you\u2019re paying on time and trying to increase your credit score. <\/p> The impact of your utility bills on your credit score depends on your energy provider and what credit reference agency is used by the lenders you apply to in the future.<\/p> Nevertheless, in every imaginable scenario, it is extremely useful to pay your utility bills on time and avoid falling into arrears.<\/p>What could be recorded on my credit file?<\/h3>
How could it affect my chances of getting a loan or credit card?<\/h3>
Does paying bills increase your credit score?<\/h3>
What happens to my credit score if I forget to pay my bills?<\/h3>
How can I build up my credit score?<\/h3>
How can I stay on top of my utility bills?<\/h3>
Impact of joint utility bills on credit scores<\/h3>
What if my name isn\u2019t on the bill?<\/h4>
Dos and don\u2019ts<\/h3>
Do<\/h4>
Don’t<\/h4>
The bottom line<\/h3>
Frequently asked questions<\/h3>
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