Can you use your cellphone bill to build credit?
Key takeaways
- Cellphone providers typically don’t report your on-time bill payments to the credit bureaus, but they may report negative information like missed payments.
- There are ways to get credit for cellphone payments, such as signing up with a third-party service that reports to the credit bureaus.
- Consider other options for building your credit, such as secured credit cards.
If you’re working to establish your credit for the first time, or are trying to rebuild your credit after a setback, you may wonder if paying your cellphone bill on time and in full could help you reach your goals. Your cellphone bill won’t automatically help you build or repair your credit, but there are some strategies you can use to get credit for your on-time payments. You can couple these with a few other tactics to get your credit score moving in the right direction.
How your cellphone bill can affect your credit
Paying your cellphone bill on time each month is a good financial habit, but it may not help increase your credit score. Typically, cellphone providers don’t report your payment activity to the credit bureaus. When you pay your phone bill, you’re paying for services rather than repaying money you borrowed.
Unfortunately, it’s easier for your cellphone bill to negatively impact your credit. Your credit may take a short-term hit when you open the account. Cellphone providers may report missed payments or unpaid bills to the credit bureaus.
Ways your cellphone bill can negatively impact your credit score
When working to improve your credit, it’s important to understand how your cellphone bill could hurt your efforts.
Opening new accounts
When you open a new account, your cellphone carrier will likely perform a hard credit check, even if you’re not financing a phone. The credit check is designed to predict whether you will pay your bill on time. People with poor credit (or no credit) may be required to pay a deposit.
This credit check can cause a temporary hit — as much as 10 points — to your score. If your score is already low, this drop could push you into the bad credit range. Fortunately, hard inquiries completely fall off your credit report after two years, so any impact is short-lived.
Late payments
Paying your bills on time every time is key to a good credit score, and your cellphone bill is no exception. While paying your cellphone bill won’t necessarily improve your credit score, making payments late can cause your score to drop.
Making a cellphone payment a few days late won’t affect your credit. Creditors typically only report late payments to the credit bureaus when you’re 30 or more days late. Once a 30-day late payment is reported, it can stay on your credit report for up to seven years.
Unpaid bills in collections
If you miss multiple payments, your cellphone provider may turn the unpaid bill over to a debt collection agency. The debt collection agency will contact you repeatedly to try to get the money you owe.
Being contacted by debt collectors can be stressful, but it can also harm your credit score, as accounts in collections are listed on your credit report. Like late payments, they stay on your credit report for up to seven years.
How to use your cellphone bill to build credit
While your on-time cellphone payments aren’t automatically included in your credit report, there are some strategies you can use to build credit with your cellphone. Your options include reporting your payments to the credit bureaus, paying your cellphone bill with a credit card or financing a new phone.
Report your payments to credit bureaus
It’s not possible to directly self-report your cellphone payment history to the credit bureaus. However, you can authorize various third-party companies to track and report certain monthly bills that aren’t generally included in credit reports. That can include anything from your cellphone and internet services to your power bill and rent payment. Fees may apply.
Experian Boost, a free service the credit bureau offers, is another option. It allows you to add your cellphone account (and other regular payments) to your Experian credit report. Your on-time payments are factored into your credit score, but your late payments aren’t included.
Reporting your payments to the credit bureaus might be a good option if you have little credit history and are looking for alternative methods to build credit.
Use a credit card to pay your phone bill
Cellphone providers don’t report on-time payments to the credit bureaus, but credit card companies do. That means you can pay your cellphone bill with a credit card to get recognition for your positive payment history.
To build credit with your phone bill, charge the monthly bill to your credit card, then pay off the full credit card balance on time. Consider setting up automatic payments to make the process simpler. Depending on the credit card you use, you might even earn rewards for paying your cellphone bill or benefit from cellphone protection insurance.
Using a credit card to pay your phone bill might be a good option if you have a credit card (or can get one) and you’re able to pay off the balance in full each month.
Finance a cellphone
When it’s time to get a new cellphone, financing the phone could help you build credit, as long as your on-time payment activity is reported to the credit bureaus. Cellphone providers that offer financing plans typically do not report these loans.
Some cellphone manufacturers — including Apple, Samsung and Google — offer financing options for customers. Depending on the company, the financing works like an installment loan or a credit card. Various lenders also offer small personal loans that you could use to buy a phone.
Financing a phone might be a good option if you need a new phone, have enough credit history to get approved and can afford the payments.
More ways to improve your credit
If you don’t have much credit history or have poor or bad credit, there are many strategies you can use to start establishing or repairing your credit.
Get a secured credit card
A secured credit card is a type of credit card designed for people with no or bad credit. It requires a cash deposit, and the amount of money you put down typically becomes your credit limit. Then, you can use the card to pay for your cellphone bill or other purchases, just like with a typical credit card.
Use a secured credit card wisely to build credit. Try to keep your balance low to maintain a good credit utilization ratio, and remember to pay the full balance on time every month. With responsible use over time, you may be able to upgrade a secured credit card to an unsecured version.
Apply for a retail credit card
A retail credit card is a type of credit card that’s offered by a specific retailer. Some retail credit cards can only be used at the issuer’s store or chain of stores, while others can be used anywhere that major credit cards are accepted.
Retail credit cards are among the easiest credit cards to get. Many cards only require that you have a credit score in the fair range (580 to 669) or higher, so they can be a good option for building credit. The tradeoff is that they tend to have low credit limits and high interest rates.
Become an authorized user
An authorized user is someone who’s been added to another person’s credit card account. They can make purchases using the card, but they’re not responsible for paying off the balance. They also can’t make any changes, like asking for a credit limit increase.
Becoming an authorized user on a friend or family member’s credit card is a way to piggyback off of their good credit history. The primary cardholder’s history of on-time payments will appear on your credit report, potentially benefiting your score. Make sure to be responsible with your purchases so you don’t damage your relationship and the other person’s credit.
Clean up your credit report
Many people have errors or outdated information on their credit reports. Some types of mistakes damage your credit history and leave you with a credit score that’s lower than you deserve.
You can request free copies of your credit reports at AnnualCreditReport.com. Review your reports and look for errors, such as on-time payments marked as late or incorrectly reported account balances. If you find errors, file a dispute with each bureau reporting the incorrect information — or hire a credit repair company to handle the process.
Next steps
It’s possible to use your cellphone bill to build credit, but it won’t happen automatically. Consider signing up for a service that will report your on-time phone payments to the credit bureaus, paying your phone bill with a credit card or financing your next cellphone.
You can also take steps to build or repair credit without your cellphone bill. Try applying for a secured credit card or retail credit card, becoming an authorized user on another person’s credit card or cleaning up errors on your credit report.
Frequently asked questions
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