Your credit scores are calculated from your credit report data, so you want your reports to show a strong record of on-time payments. But not all of the payments you make show up on your credit reports.
That means gym memberships, your cable bill, health insurance premiums, and more likely won’t help you boost your credit, even if you’ve paid faithfully for years. However, not paying them can damage your score if your account is sent to Collections.
Here’s a look at whether recurring bills create credit and new ways to add them to your credit profile.
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Does paying a phone bill create a credit?
Paying the phone company faithfully month after month doesn’t help you increase your credit because phone companies typically don’t report to credit bureaus. Even financing your phone or leasing it through a phone contract won’t create credit because businesses don’t report activity.
However, you may see a slight temporary drop in your credit score if the phone provider check your credit before authorizing yourself on a telephone plan.
There are a few workarounds, however:
3 ways to use your phone to earn credit
If you take out a personal loan to purchase 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. However, the monthly phone charges would not be.
Likewise, you can indirectly get credit to pay your phone bill by placing it on a credit card and paying it on time. Your credit report will only show the credit card and not your phone plan, but paying your credit card bill on time, every time is a critical part of good credit.
Some scores now have the option to include “alternative data”, such as telephone and utility bills. Experian Boost, for example, is an opt-in program that uses positive data from phone and utility payment records after you give Experian access to the account you use to pay those bills. It can help you increase 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, have not launched similar products. And while Experian’s algorithm increases most credit scores, it doesn’t raise all of them. If that lowers yours, you can unsubscribe.
Does paying for insurance create credit?
In most states, auto insurers are allowed to use information from your credit reports to help you set insurance rates. This way have a bad score may result in a higher payment for auto insurance. (The exceptions are California, Hawaii, and Massachusetts.)
But paying your car insurance premiums on time usually won’t help you build credit. Because auto insurance companies don’t lend you money, they don’t report your payments to the credit bureaus. If you stop paying, they simply cancel your coverage.
However, if you put your auto insurance premiums on a credit card and pay them on a timely basis, your insurance payments can indirectly help increase credit. And having a car loan or lease can help: Car payments are usually reported to the credit bureaus, so they affect your credit.
As with auto insurance, paying for health insurance (or not paying) does not affect your credit.
Does paying medical bills create credit?
Just paying medical bills usually doesn’t create credit unless you put them on a credit card. Then they are just like any other load, and pay on time and keep balances low can help your credit.
However, credit cards must be used as a last resort; it is often possible to find a cheaper method of payment or to negotiate a discount.
There is medical credit cards, designed to help make reimbursement for medical expenses more affordable, but they are still credit cards and should be assessed the same as all others. Know the annual percentage rate, the terms of payment and the penalties that could result from it. Compare them with other types of credit cards, such as those offering 0% interest offers.
Medical credit cards report to the credit bureaus. Likewise, medical loans are still loans and report to the credit bureaus, so paying them on time will help increase credit.
You get a break from medical debt: it can’t be reported to the credit bureaus for 180 days, so you have time to work out a payment plan or pay for insurance. Additionally, medical collections should be removed from your credit report if they are subsequently paid for by insurance.
Does Paying Cable or Internet Bills Help Increase Credit?
When you sign up for cable or internet service, you may need to accept a credit check. It may take a few points off your credit score if it is a “serious demand” on your credit. But a good credit score can save you from having to pay a down payment or get a lower one.
However, paying utility and cable bills on time won’t help your credit, as most utilities don’t report to the credit bureaus. However, like other recurring bills, if you put them on a credit card and pay on time, it creates a good payment history and improves your score.
Non-payment may result in the creation of your account go to collections. Collections are reported to the credit bureaus and can seriously damage your score.
As with phone bills, cable and Internet bills can improve your score if you choose Experian Boost. Your TransUnion and Equifax credit reports will not be affected.
Does Paying Tuition Help Create Credit?
Paying school fees doesn’t help your credit unless you take out a loan to pay it off and then pay the money back. Student loans, paid as agreed, will help increase credit. But if you pay the tuition without funding it, your credit score won’t be affected.
Does Capital Leasing Help Create Credit?
Most hire-purchase operations do not report your payments to the credit bureaus, and payments that go unreported cannot constitute your credit. Additionally, hire-purchase contracts typically cause consumers to pay significantly more for an item than it is worth.
Another type of rental can build your credit: Rental payments for a house or apartment can be reported to the credit bureaus and can help build certain scores.
What helps you create credit?
If you hope to plump a light credit report, there are options to add credit lines without adding debt.
Two options to consider:
A secure credit card who reports to the credit bureaus. You can avoid adding debt and paying interest by paying the fees online as quickly as they are posted – while still getting the credit benefit.
Make sure you understand the fee structure of any credit before you apply. You can also search for a credit product that can be obtained without difficult credit check so that the simple request does not lower your credit score.
Either way, payments made on time and reported to the credit bureaus can help you build or rebuild your credit, even if some of your regular bills aren’t directly contributing to your score.