Does A Phone Bill Build Credit

Having a good credit score is important for a variety of reasons, from getting approved for loans and mortgages to qualifying for lower interest rates. While the most common ways to build credit involve taking out loans or credit cards, many people are unaware of whether or not paying a phone bill can help to build credit. In this blog post, we will explore the answer to the question: Does a phone bill build credit? We will look at the ways paying a phone bill can impact your credit score, what type of phone companies report to credit bureaus, and steps you can take to increase your credit score if you’re using a prepaid phone plan. By the end of this post, you will have a better understanding of the relationship between your phone bill and your credit score.

3 ways to use your phone to build credit

If you take out a personal loan to buy a cell phone and use it for a “bring your own phone” plan, your loan would be reported as installment debt and on-time loan payments would be reported. The monthly phone charge would not, though.

Similarly, you can indirectly get credit for paying your phone bill by putting it on a credit card and paying that on time. Your credit report will show just the credit card and not your phone plan, but paying your credit card bill on time, every time is an essential element of good credit.

Some scores now have an option of including “alternative data,” such as phone and utility bills. Experian Boost, for example, is an opt-in program that uses positive data from phone and utility payment records once you give Experian access to the account you use to pay those bills. That can help raise your Experian FICO 8 scores (there are many other scores, but FICO 8 is widely used in credit decisions). The other two major credit bureaus, TransUnion and Equifax, havent introduced similar products. And while Experian’s algorithm raises most credit scores, it doesnt raise all of them. If it lowers yours, you can opt out.

The majority of states allow auto insurers to use information from your credit reports to help determine insurance rates. In this way, having a low score can lead to higher auto insurance costs. (The exceptions are California, Hawaii and Massachusetts. ).

But generally, timely payment of your auto insurance premiums won’t help you establish credit. Car insurance companies do not report your payments to credit bureaus because they are not lending you money. If you stop paying, they simply cancel your coverage.

However, if you charge your auto insurance premiums to a credit card and make timely payments on that card, your insurance payments may inadvertently assist in establishing good credit. Additionally, having a car loan or lease can benefit you because car payments are frequently reported to credit bureaus and therefore have an impact on your credit.

Like car insurance, health insurance doesn’t affect your credit if you pay it or don’t.

Does Paying a Cell Phone Bill on Time Help Me With My Credit?

A payment must be reported to the credit bureaus in order for it to assist you in establishing credit.

Since cell phone providers don’t often report to credit bureaus, paying that bill won’t help you establish credit. Your credit score will improve if you use a credit card to pay for your cell phone bill and make your credit card payments on time.

However, in that instance, paying your cell phone bill is not directly beneficial to establishing credit.

You must locate and use a service like StellarFi, Experian BOOSTTM, or Grow Credit if you want your cell phone bill to help raise your credit score.

You can add payment history for bills like your phone bill, cable bill, and streaming service bill to your credit reports using any of these free tools.

With StellarFi, virtually any bill can be reported to the credit bureaus. It offers direct access to your bank account and lets you link any bills you want.

Your cell phone bill, rent, utilities, internet, and streaming services may all fall under this category.

This service is one of the best and simplest ways to establish credit, with monthly fees as low as $5. You are free to cancel at any time, and there are no additional fees or interest charges.

Experian will scan your bank account when you sign up and let it know which payments you want to make, only choosing those that will improve your credit score. The service will only have an impact on your Experian credit score, which is a drawback.

The Experian BOOSTTM process only takes a few minutes and is completely free. Users of Experian BOOSTTM experience an average increase of 13 points in credit scores.

Instead, Grow Credit reports payments from your cell phone bills, TV streaming services, internet bills, and other bills so that you can establish credit with all three credit bureaus.

They report payments from the following cell phone companies:

It’s possible, but not guaranteed, that your business cell phone account will show up on your business credit reports with Dun & Bradstreet, Equifax, or Experian if you’re trying to establish business credit.

Naturally, using a personal cell phone for business purposes won’t help you establish business credit because personal accounts do not show up on business credit reports.

Obtaining a business credit card, using it to cover business expenses, and then making on-time monthly payments is one way to make sure you are establishing good business credit scores.

Does paying medical bills build credit?

Unless you put your medical bills on a credit card, simply paying them off won’t usually improve your credit. Then, they become just another charge, and maintaining low balances and timely payments can improve your credit.

Credit cards should only be used as a last resort, though, as it’s frequently possible to find a more affordable method of payment or to negotiate a discount.

There are medical credit cards available that are intended to help make paying back medical debt more affordable, but they are still credit cards and must undergo the same scrutiny as other credit cards. Understand the terms of payment, the annual percentage rate, and any potential penalties. Compare them to other credit card types, like those that offer 0% interest offers

Medical credit cards do report to the credit bureaus. Likewise, paying back medical loans on time will help establish credit because they are still loans and report to credit bureaus.

One benefit of medical debt is that it cannot be reported to the credit bureaus for 180 days. This gives you time to come up with a payment plan or wait for insurance to pay. Additionally, if medical collections are later reimbursed by insurance, they must be removed from your credit report.

Do Cell Phone Contracts Build My Credit? – Credit Card Insider

Reference:

https://www.experian.com/blogs/ask-experian/how-can-cell-phone-bills-help-build-credit/

https://www.bankrate.com/finance/credit-cards/can-cell-phone-bill-build-credit-score/