Why Your Cable Bill Could Soon Ding Your Credit Score

Jacqui Kenyon
Posted

remoteWe’ve told you the basics of building and maintaining a high credit score—paying bills on time (every time), keeping credit utilization below 30%, making sure accounts never end up in collections, etc. Having a high credit score is crucial for your financial health, since it determines how much you’ll pay in interest for a mortgage or other loan.

The current credit scoring system favors consumers who take on debt (responsibly, of course)—while penalizing those who would prefer not to use credit at all. Americans who shy away from loans and credit cards are left without a credit history, which makes it very difficult to get a loan at a good rate—even if they are perfectly capable of and willing to make payments on time.

RELATED: How Your Credit Score Works

New legislation currently on the floor of Congress seeks to rectify this issue. The “Credit Access and Inclusion Act” will include payment histories for accounts that aren’t loans—like utility bills, cable and rent—in the credit scoring process. That way, people who don’t use credit cards or don’t have mortgages or student loans would be rewarded for paying their other expenses on time with a higher credit score. If passed, the bill could have a dramatic effect on a large swath of people: Congressman Keith Ellison, co-sponsor of the bill, told MarketWatch that 50 million Americans currently don’t have credit scores.

How the New System Could Hurt Consumers

While recent research by WilliamPaid, a rent-payment service, found that 70% of respondents wanted their rent and utility payments to count toward their credit scores, opponents posit that having more factors in a credit score just gives people more chances to make mistakes and damage their scores. “It can take years to build a solid credit score and a few months to destroy it, and then it would take as long as 7 to 10 years to rebuild it again,” John Ulzheimer, consumer credit expert with CreditSesame.com, told MarketWatch.

With lending requirements still tight from the recession, credit scores are more important than ever. It’s now for Congress to decide what should count toward determining how reliable a borrower will be.

RELATED: The 7 Deadly Credit Sins You Don’t Want to Commit

  • http://www.50by25.com/ Laura

    I think this is a great idea. More transparency is always a good thing, and if someone isn’t paying ANY bill on time, that’s good reason to ding their credit report.

  • Nuna

    As a landlord, I would love this. It would help make people more responsible regarding their finances and alert landlords to irresponsible tenants. Seriously, if you can’t pay your bill for the roof over your head responsibly… I would like to know that so I don’t rent to you.

    • kgal1298

      Precisely. My issue being is landlords in LA tend to just look at the score, which mine has been ravaged by student loans, but I would love for them to see I do pay rent on time then maybe it wouldn’t be so dang hard to move in this city.

  • qwertyuiop

    While I do have a credit history, I also pay my bills on time and would like that to work in my favor on top of any credit cards and loans. This is also an easy way for me to help my husband build credit. While I did help him sign up for a credit card to build his credit, moving a utility bill into his name would be a much easier and safer way for him to build his credit history.

  • kgal1298

    This is going to kill some people, but I would be in the bracket that wants it to count because it could help my score which would be great because I pay all those other bills on time. This way when you apply to a new place to rent then maybe they could see you have paid your rent on time rather than listening to some shitey land lord who might lie because they just don’t like you.

  • Nate

    I am completely on board with this. This will benefit businesses greatly and will hopefully cause people to pay their bills on time.

  • doiqoco

    bpRW Last years i used to be so low on money and debits were eating me from all sides!! That was UNTIL I learned to make money on the Internet. I landed on surveymoneymaker period net, and started doing surveys for money, and yes, I have been far more able to do my things! I am glad, I did this! 9mcc