You probably have heard that being late in paying your bills can whittle away at your credit score. But which bills have the most impact?
When credit bureau TransUnion conducted a survey of consumers asking that very question, it found a lot of confusion. The fact is that not all of your monthly payments are routinely reported to credit agencies. But some are.
Nearly half of consumers who rent their homes mistakenly believe rental payments are automatically reported to credit bureaus and therefore affect their credit scores.
"Most consumers report paying rent on-time, but many don't realize that until now these payments are not boosting their credit histories," said Ken Chaplin, senior vice president of TransUnion.
Rental payments are starting to count
But that appears to be changing. Chaplin says more property managers are starting to report payments to credit bureaus and renters should be consistently monitoring what is being registered on their individual report.
More than 50% of consumers in the survey mistakenly believe payments for cable and Internet fees, utility bills and cell phone bills are regularly reported to credit bureaus. They aren't, unless of course you fall so far behind that it gets turned over to collections.
Paying your mortgage on time is regularly reported to credit agencies but fewer than 29% of consumers knew that.
The trend of property managers reporting rental payments to credit agencies is one TransUnion says will benefit renters in the long run. That's because, to build up a credit rating you need credit.
If rent is counted as reportable credit, then renters have the same opportunity to build their credit score as homeowners who pay a mortgage.
"Expanding the share of property managers who report rental payments will produce more accurate information that truly reflects how consistently consumers meet their financial obligations," said Chaplin. "It will benefit renters who want to help their credit scores and landlords who want to attract renters who pay rent on-time."
Renters appear to welcome the monitoring. More than half of renters in the survey said they would be more likely to choose a property to rent if they knew their landlord would report their rental payments to credit bureaus.
Check your credit report
There are other ways consumers can improve their credit scores. It starts with checking your credit report once a year, using www.annualcreditreport.com. Your credit report contains the data used to calculate your score and it may contain errors. Additionally consumers can hire a credit repair company - these companies provide consumers legal services to address credit report issues.
It's important to check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is accurate. If you find errors on any of your reports, dispute them with the credit bureau and reporting agency.
Be on time
The best way to improve you credit score is to pay all your bills on time, whether they are reported to credit agencies or not. Take advantage of your bank's payment reminders. They can send you a reminder by text or email when a payment is due.
You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account. However, this tool usually makes only the minimum payment on your credit cards and does not help instill a sense of money management.
If you are having trouble paying bills contact your creditors or see a legitimate credit counselor.
This won't rebuild your credit score over night but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a credit counseling service will not hurt your FICO score.