How Much Does a Late Utility Bill Hurt a Credit Score?

A late payment on a utility bill should not hurt your credit score at all -- unless your account becomes several months past due and the utility company assigns it to a debt collection agency. The myFICO website says the collection agency may list the bad debt on your credit report, and that could cause your score to drop.

Identification

A utility bill is a "non-credit obligation," according to myFICO and that's why it usually has no impact on your credit score. Maintenance work performed on your car for a fee is another example of a non-credit obligation.

Considerations

MyFICO says your credit score is affected only by the information included in your credit report. Non-credit obligations to your electric company, cell phone carrier or other utility usually are not tracked by the credit reporting agencies. MyFICO says these accounts won't have any impact on your credit as long as you pay them as agreed. Paying as agreed does mean paying on time, but it's unlikely that your account will be assigned to a collection agency if you're just a few days late.

Misconceptions

Some people make the mistake of skipping out on their utility bills altogether -- a big mistake, myFICO says. An example could include a graduating college student who moves out of an apartment and simply ignores the final bill from the electric and telephone companies. MyFICO says people fail to realize that these relatively small bills can cause big trouble down the road,.

Effects

People who skip out on utility bills could be stunned to later find them all listed on their credit reports as collection accounts. Collection items are accounts that were written off by the creditor -- in this case the utility company -- and then sold or assigned to a debt collector. MyFICO says collection items are very damaging to your credit score. Several factors are used to calculate your credit score, and your payment history comprises 35 percent of your score, according to myFICO. Collection items are included in your payment history and are considered a very negative entry on your report.

Prevention/Solution

Avoid credit problems with your utility bills by paying on time -- including any final bills if you discontinue service.