This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Paying these bills on time? Credit bureaus don't care

Pay your utility bill on time every month? Never miss a rent payment? Those are both smart financial moves, but here's the downside: Neither of those sound habits will improve your credit score, and they're not the only ones.

Many of the timely payments you make each month may offer no benefit to your credit score. While this doesn't mean that you should begin neglecting your utility bills, it does mean that the payments you prioritize each month can affect your credit in unexpected ways.

Overlooked punctuality

Scott Shellady, vice president of the Trean Group, a Chicago-based brokerage, says it's unfair that many on-time payments don't help consumers' credit.

Many consumers pay their electricity and water bills on time every month, even when they are struggling financially, because they don't want these services cut off. They might, however, choose to skip a mortgage payment because it can take a far longer time for the full consequences -- a foreclosure -- of missing this payment to occur.

The result? These consumers' credit suffers for the missed mortgage payment, but receives no boost for the on-time utility payments.

"They might pay 80 percent of their bills on time every month," Shellady says of people in this situation. "But that doesn't show up in their credit score. Instead what does show up is that they missed a mortgage payment. That's unfortunate. There should be some positive result for paying bills such as utility and water bills on time each month."

Unfortunately, many of the bills that you pay each month won't help your credit score at all -- though some of them can do the opposite if you fall into delinquency.

The high cost of a low score

Mortgage lenders rely on your credit scores to determine whether you qualify for a mortgage loan and what interest rate you'll pay on it. Similarly, a low credit score might make it impossible to qualify for an auto loan. Some insurance companies also use credit scores to help set the price of your policy. Some employers might even pass on your resume if your credit score is too low.

Today, many lenders agree that FICO credit scores of 740 or higher are considered excellent. On the other hand, FICO scores of 620 or less can make it tough to qualify for a mortgage loan at a reasonable interest rate.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 17,630.27 +189.68 1.09%
S&P 500 2,093.25 +25.61 1.24%
NASDAQ 5,089.2060 +49.43 0.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs