Are Utility Payments Reported to the Credit Bureaus?
Are Utility Payments Reported to Credit Bureaus?
Gas and electric utilities do not report regular or irregular payments to the credit bureaus. They do report accounts that are seriously delinquent that they have charged off. Typically these old delinquencies are assigned to debt collectors who list them with the credit reporting agencies without fail. You can lose but you can’t win! Casinos and loan sharks would blush at such an arrangement.
Changes in Utility Bills Reporting to Credit Agencies are Being Considered
This will soon change if Congressman Jim Renacci succeeds in getting H.R. 6363 enacted into law.
“Those who have yet to gain credit should be able to use all the tools available to them to establish their credit worthiness” says the Congressman in advancing his view that on-time payments of utility bills can help consumers with thin credit files to establish their trustworthiness.
Consumer lawyers express some fear that such a bill would also enable reporting of late payments, especially those that are made by consumers who fall behind seasonally only to make it up when demand eases. Low income people often are compelled to use this strategy in winter when heating bills overwhelm their resources. A hungry child in need of food will not wait.
Consumers Should be Able to Choose to “Opt In”
Perhaps “opting in” would be a good compromise. The answer to the question Are Utility payments reported to the credit bureaus? could be yes or it could be no. Those who need to develop a new credit file would then have an opportunity to demonstrate their trustworthiness by opting in. Those who would be disadvantaged by this system could just leave things the way they are. This topic comes up for regular discussion among lawmakers on an annual basis. It never seems to get close to enactment.
Thin Credit Files can be Improved in Other Ways
The best way to improve thin credit files is to apply for secured credit cards. These are low limit cards secured by the consumers own money. They are paid monthly. They report to the credit bureaus on a regular basis. Building a good track record with these cards helps as much as a good track record with normal unsecured cards. Another method to improve thin credit files is to “piggyback” on another person’s good track record by becoming an authorized user on one of their cards. If you are fortunate enough to have a friend or relative with good credit who will let you do this you can make instant improvement. An older card that does not carry a big balance will help you the most. You don’t even have to actually take the card to avoid temptation.