At a Glance

Payment history makes up 35% of your credit score. Paying bills like loans or credit cards will positively affect your credit score, while missing payments will negatively affect your score. Noncredit bills such as rent, utilities, and medical bills typically don’t affect your score, though there are times when they could and ways you can use them to build your credit.
Read on to learn:

How do late bill payments affect your credit score?

Making payments on time as well as making late payments, or missing payments altogether, can affect your credit score. However, not all bills are treated the same by the three credit bureaus (Experian, Equifax, and TransUnion). For example:

  • If a rent payment is 30 days or more past due, the landlord can decide to report the late payment to the credit bureaus. Otherwise, though you may be charged a late fee, your score will not be affected.
  • If you’re late on a phone, internet, or TV bill, it likely won’t affect your score. However, if you miss multiple payments or don’t make payments at all, the service provider may report the late/missed payments to the credit bureaus and this will decrease your score
  • Utility bills like gas, water, and electricity won’t affect your credit score unless you default, meaning you miss so many payments the provider closes your account and sends your debt to a collection agency.
  • Medical bills are treated slightly differently and likely won’t hurt your credit. Instead of reporting late or missed bills to the credit bureau, most health care providers send them to a collection agency. Then, the credit bureaus will wait 365 days before medical debt sent to a collection agency will appear on a credit report.

Making payments on time for these types of bills will also not affect your score because these payments are not reported to the credit bureaus.

Credit cards, personal loans, auto loans, mortgages, and similar financing are treated differently. One late payment will likely have an immediate negative effect on your score. While it may not significantly decrease your score, having multiple late or missed payments can have a massive impact.

Alternatively, consistent, on-time payments for those bills help improve your credit score.

Other things you might not know that affect your credit

In addition to paying (or not paying) bills, there are other things that can affect your credit that you may be unaware of:

1. Business credit cards

If you’re a primary account holder on a credit card for your business, it’s likely that you’re responsible for any debts racked up with it. This also means your payment history will be reported to credit bureaus, including late or missed payments. If you have a business credit card it’s important to treat it as you would a personal card since it can also affect your personal credit score.

2. Excessive recent credit applications

Credit applications, such as those for credit cards, auto loans, personal loans, student loans, mortgages, and similar financing can have an impact on your credit score, especially if you’re submitting multiple applications in a short time period. Each of these applications triggers a hard credit inquiry, which can decrease your score by up to ten points each. Even though new credit card offers may seem tempting, try to limit your number of credit applications submitted.

3. Missing accounts

Occasionally, a creditor may not provide information to the credit bureaus, and this can lower your score. For example, if you have a credit card that you pay on time and in full each month, this can increase your score. But if it isn’t included in your report, it won’t have an effect. If you notice that an account has been left off your credit report, contact the creditor and request they begin reporting your credit information. Or consider moving your account to a different creditor who does report regularly.

4. Small unpaid debts

If you think smaller unpaid debts don’t matter for your credit score, think again. In fact, debts like library fines, parking tickets, bank fees and overdrafts, fines and fees imposed by courts or law enforcement, and similar debts can all be reported to the credit bureaus. Or the debts may be sent to a collection agency, which would then report the debt. While these debts may seem unimportant, they can bring down your score.

5. Long-term loan shopping

When considering taking on a large debt, such as a personal loan, auto loan, or mortgage, you’ll likely want to shop around to find the best interest rates and terms. FICO typically considers multiple inquiries as just one inquiry if they happen within either 14 or 45 days. This way, you don’t have to be concerned about finding the best loan for you.

However, if you continue to shop around for several weeks or months that fall outside of that 45-day period, your credit score will be negatively affected.

6. Mistakes and fraud

Mistakes happen, but incorrect information in your credit history can damage your credit score. For example, typos, clerical errors, or even finding other people’s information in your file can all affect your score. Additionally, if someone steals your identity, your credit score can be significantly damaged. That’s why it’s important to check your credit report at least once yearly and dispute any mistakes or fraud you may find. Or consider working with a credit monitoring service to catch any mistakes or fraud early.

Which bills help you build credit?

Not every payment you make goes on your credit reports, so not all recurring bills build credit or affect your credit score. However, there are a few creative ways you can get them added to your credit profile:

  • To build credit with a phone bill:
    • Take out a personal loan to buy the cell phone and use it for a “bring your own phone” plan. This loan will be reported as installment debt and loan payments will be reported.
    • Pay your phone bill with a credit card and pay off the card on time and in full each month.
  • To build credit with insurance:
    • Pay your insurance premiums with a credit card and pay off the card on time and in full each month.
  • To build credit with medical bills:
    • Pay your medical bills with a credit card and pay off the card on time and in full each month.
    • Consider taking out a medical loan to pay off the bills. These payments will be reported to credit bureaus.
  • To build credit with cable or internet bills:
    • Pay your bills with a credit card and pay off the card on time and in full each month.
  • To build credit with college tuition:
    • Taking out a student loan to pay for college will help build credit if payments are made on time each month.

The bottom line is you can use a loan or credit card to pay for just about any bills, but it’s critical to pay off your card on time and in full each month to avoid negative impacts to your score. Also take into consideration the interest rates, fees, and other costs for having a card or loan to ensure you don’t get further into debt.

It’s also important to remember that while these bills won’t directly affect your credit score, if you make too many late payments or miss payments altogether, those could be reported to a collections agency and therefore reported to the credit bureaus, which will decrease your score.

Types of accounts that can impact credit score

While credit scoring models vary by bureau and lender, the FICO score, used by most top lenders, says that payment history has the most significant influence on your score. Typically, credit reports have recorded payments on two types of debt:

  • Installment loans: With an installment loan, you borrow a lump sum of money that you receive all at once and pay it back in a series of regular monthly payments over a set period. Examples include student loans, auto loans, personal loans, and mortgages.
  • Revolving loans: These loans allow you to borrow against a certain borrowing limit and make repayments of varying amounts, though you must make the minimum required payment each month. Examples include credit cards, and some home equity loans.

Knowing which types of accounts have the most significant impact on your credit score, as well as how other accounts can indirectly affect your score, can help you learn how to avoid a decrease in your score due to your payment history.


Paying off the debt completely can lead to a temporary drop in your credit score. This can happen if the debt was your only installment account if you now have fewer types of credit, or if your average account age decreased. It can also happen if your credit limit was reduced, credit utilization increases, and other reasons. The good news is that the decrease is likely temporary and can be made up for with other responsible habits.

Related: Why Did My Credit Score Drop After Paying Off Debt?

Both installment loans (like student loans, personal loans, auto loans, and mortgages) and revolving debt (like credit cards) can affect your credit score. This is because your payment history is reported to the credit bureaus. If you make all your payments on time your score may increase, while late or missed payments will cause a decrease in score.

Lenders typically report account activity at the end of each billing cycle, so it will take 30 to 45 days for payments to impact your credit. If you pay off an installment loan, your credit score will likely decrease, but should rebound within one or two months. Keep in mind that bill payments can affect your credit for up to seven or 10 years depending on the type of debt.