If You Are Late on Utility Bills, Does It Affect Your Credit Score?

Missing a utility bill payment usually triggers a late fee, but in some cases, it can have an even more significant impact by lowering your credit score. The effect of late utility bill payments on your credit score depends on whether or not the utility company reports it to the credit bureaus.

Your credit score is based on the information that appears on your credit reports. Therefore, information that is not on your credit report cannot affect your credit score. Your payment information appears on your credit report only when lenders send the information to the credit bureaus. Negative information, such as late payments, will hurt your credit score, whereas positive information, such as on-time payments, will help your score.

In general, utility companies do not report payment history information to the credit bureaus on a regular basis. This is because they are not creditors in a formal sense and because the credit bureaus charge companies a fee to submit information for credit reports. Utility companies generally do not want to go through the hassle and cost of reporting payment history. Therefore, if you are only a month late on your utility bill payment, it should not affect your credit score.

When a utility bill is left unpaid for 90 days, the company generally considers it to be delinquent and sells the debt to a collection agency. The collection agency may automatically report the delinquency to the credit reporting bureaus, or it may hold off, using the threat of reporting as leverage to get you to pay the bill. Once it's reported, it will have an adverse impact on your credit score. In addition, the collection agency will call you and send letters to try to get you to pay the debt.

When a late utility bill makes it onto your credit report, it will remain there for seven years, but as time goes by, its impact on your credit score will diminish. Except for some bankruptcies and unsatisfied court judgments, credit bureaus generally purge their files of data that's more than seven years old. The number of points your score will drop depends primarily on the length and number of delinquencies. People with higher credit scores will see a greater drop with a late payment.