Does Your Credit Rating Go Down If You Are Late on Paying a Utility Bill?

Credit reports and credit scores are often ordered and viewed by potential lenders during the process of evaluating you for a loan. The information that creditors report to credit bureaus affects your credit score. You should be aware of which creditors you have that report to credit bureaus and how late payments can affect your credit score.

Credit Reports

Credit reports are maintained by three major credit bureaus: TransUnion, Equifax and Experian. Creditors report information to the credit bureaus of which they are members. A creditor must join a credit bureau to be able to report your financial information. Some creditors will join all three credit bureaus, while other creditors may join only one or two. For this reason, each credit report will be slightly different with each credit bureau. Your reported payment history is a large component of your credit score.

Credit Scores

Credit scores are calculated based on the information your creditors report. According to myfico.com, the largest portion of your credit score, 35 percent, is based on your payment history. The remaining factors are age of credit file, new accounts, credit balances and inquiries. Having late payments reported to your credit report can cause your credit score to go down. The lower your credit score, the harder it is to establish new credit.

Reporting Accounts

Late payments and other information is generally reported to credit bureaus from credit card companies, mortgage companies and other financial lenders. Creditors, generally, report each month and include information such as balance, monthly payment, payment status and type of account. There are certain types of companies that, generally, do not report monthly payment status and will only report if an account is in default status.

Utility Companies

Utility companies do not often report your monthly payment history; however, if you close the account with a balance owed, the company will report the negative status. For the utility companies who do report monthly, a late payment cannot be reported until it is 30 days late. By paying a payment a few days late, you are not at risk of being reported to the credit bureau. Your credit score will only drop if the utility company does report to the credit bureau and the payment is over 30 days late. To find out if your utility company reports to the credit bureau, contact the customer service number on your bill and ask if late payments are reported and, if so, to which credit bureaus.