Which Monthly Bills Impact Your Credit Score the Most?
Your payment history can be the most important factor in your credit score, and it includes whether you’ve made payments on time, missed payments, had accounts sent to collections, or filed for bankruptcy.
All this information comes from your credit file at one of the three major credit bureaus: Equifax, Experian, and TransUnion. When the credit bureau creates your credit report, it includes your monthly payments and other account information, and it can give creditors a credit score based on your report. This means your monthly bills only impact your credit scores if they’re part of your credit report.
Some of your monthly bills almost always get reported to the bureaus and included in your reports. Others are rarely reported, but you could try to add them to your credit report to improve your credit. And some payments never affect your credit scores.
Monthly bills that usually affect your credit scores
Most people’s credit history depends on how they’ve used and paid installment loans and revolving credit accounts. Let’s take a closer look at each.
Installment loan payments
Most loans are installment loans. You receive the entire loan upfront and repay it with periodic (usually monthly) payments over a set repayment period. These include:
- Auto loans
- Home loans
- Personal loans
These loans can be unsecured, when you qualify based on your creditworthiness. Or secured, when you offer the lender collateral that it can take if you fall behind on payments.
In either case, the amounts you owe, the number of accounts with balances, and the remaining balance relative to the initial loan amount can affect your credit scores.
Revolving account payments
Revolving credit accounts have a credit limit and require minimum monthly payments, but they don’t have a predetermined repayment period. These accounts can include:
- Credit cards
- Personal lines of credit
- Home equity lines of credit
In addition to your payment history, amounts owed, and the number of revolving accounts with balances, your revolving credit utilization ratio can significantly impact your credit scores.
Credit utilization is the percentage of your credit limits that you’re using based on the information in your credit report, not your current balances. And low utilization (low balances relative to your available credit) is best.
Monthly payments that might affect credit scores
Some monthly payments usually don’t get reported to the credit bureaus. As a result, they don’t wind up in your credit reports and can’t affect your credit scores. However, if you can get your payments reported or added to your credit reports, you can use them to build or improve your credit.
Ideally, your payments get reported to all three credit reporting agencies. Otherwise, they will only appear in one or two of your credit reports and only affect the credit scores based on those reports.
Keep in mind, the effect also depends on the type of credit score. For example, the latest FICO Score 9 and FICO Score 10 credit scoring models consider rent payments. However, the older FICO Score 8—which many creditors still use—doesn’t consider rent payments even if they’re in your credit report.
With all those caveats in mind, here are three common payments that you might be able to use to build credit:
Some landlord and property management companies use rent payment services that will report your monthly payments to one or more credit bureaus. However, even if your landlord doesn’t use one, you can look for a rent reporting service for tenants.
Utilities and cellphone plans
Utility companies and cellphone services rarely report directly to the big three consumer bureaus. However, you may be able to use a third-party service to get your utility bills and cellphone payments added to your credit reports. Several options are available, but many charge a fee, and most only report your on-time payments for phone and utility bills to one or two credit bureaus.
Monthly payments for subscriptions, such as streaming services, generally don’t get reported to the credit bureaus. A few third-party services can add your on-time payments to one or two of your credit reports. Alternatively, you could strategically use a credit card for low-cost subscriptions and set up automatic payments to build credit.
Monthly payments that don't help you build credit
Some common monthly payments don’t get reported to the credit bureaus, and there aren’t even third-party services that can help. These include:
- Insurance, including health, auto, homeowners, and renters insurance
- Payday and pawn loans
- Some online high-interest installment loans
- Gym memberships
Although you can’t build credit with these payments, missing payments could still result in an account going to collections. The collection agency might report your collections accounts to the credit bureaus, which could hurt your credit scores.
Two special cases: medical bills and student loans
Several laws and policies affect how medical debt and student loans can affect your credit.
How do medical bills impact your credit scores?
Similar to the payments that don’t help you build credit, your on-time medical bill payments aren’t reported to the credit bureaus. Unpaid medical bills can be sent to collections, but there are a few special rules for medical collection accounts:
- Medical collections don’t appear in your credit reports for at least 12 months, giving you time to work out payments with your insurance company, the medical provider, or the collection agency.
- Medical collections for under $500 aren’t added to your credit report.
- Paid medical collections accounts get removed from your credit reports.
Additionally, the latest VantageScore models (VantageScore 3.0 and 4.0) ignore medical collection accounts with any balance.
FICO Score 9 and FICO Score 10 ignore paid medical collections, and unpaid medical collections don’t hurt those scores as much as non-medical collections.
How do student loans impact your credit scores?
Similar to other installment loans, your on-time student loan payments can help you build and improve your credit. However, unlike many creditors, federal student loan servicers generally don’t report late payments until someone falls at least 90 days past due.
Additionally, most student loan borrowers had their federal loan payments paused for several years. Payments resumed in October 2023, but there’s a temporary “on-ramp” period and loan servicers won’t report missed or late payments to the credit bureaus through September 30, 2024.
Still try to make your payments on time if you can, especially because interest is accruing. You can look into income-driven repayment plans if you’re struggling with the payment amount. These can lower your monthly payment based on your income, all the way down to $0 in some cases, and allow you to keep your account in good standing.
Use on-time payments to build credit
Making your minimum payments on time can keep late payments, collection accounts, and other negative information off your credit reports. In particular, on-time credit card and loan payments can help you establish and maintain good credit.
That's one reason Ava gives you access to both the Ava Card and Ava Savings Builder Account, a credit-builder installment loan. Neither account charges fees or interest, and Ava reports your payments for both accounts to all three credit bureaus.