Is life just work and paying bills? At times it can feel like it, we know. However, paying your bills can actually help you improve both your current financial situation and your financial future. Namely, if you're interested in building your credit, it's important to be aware of the bills that can help or hurt your credit score. 

In this quick guide, we'll take a look at six bills that can have an impact on your credit rating. We'll also provide some tips for managing your bills and improving your credit score. So whether you're just starting or you're working to rebuild your credit, read on for helpful information.

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Which Bills Help Build Your Credit?

If you're looking to build up your credit score, paying your bills on time is a great place to start. Payment history is one of the most important factors that go into calculating a credit score, so by paying your bills on time, you can give your score a boost. 

Additionally, paying your bills in full can help you avoid paying interest and fees, which can further improve your financial health. Of course, paying your bills alone won't guarantee a perfect credit score, but it's a good foundation to start from. 

Basically, if you're trying to build up your credit, don't forget to pay your bills on time. Which bills help you build your credit? Here are six.

1. Regular Credit Card Payments

Regularly making on-time credit card payments is one of the best ways to improve your credit score. If you're worried about missing a payment, you can set up automatic payments so you don't have to worry about it. 

In addition to improving your credit score, making regular credit card payments can also help you improve your financial habits. When you make a habit of paying your credit card bill on time, it can help you develop better financial discipline overall. This, in most cases, naturally trickles over into other areas of your life and helps you improve your overall financial health.

2. Secured Credit Card Payments

Don’t qualify for a regular credit card due to poor credit or no credit? That’s okay. You might qualify for a secured credit card.

Different from a normal unsecured credit card, a secured credit card is a type of credit card that is backed by a deposit you make upfront. The deposit lowers the risk for the lender, which means they're more likely to approve your application. Making regular payments on your secured credit card will help improve your credit score over time. Similar to the way you’d use a regular credit card to boost credit, the best way to improve your credit score is to make all of your payments on time and keep your balance low. If you can do this, you'll be well on your way to building a strong credit history.

Likewise, there are credit builder loans with no credit check that you might qualify for. These are a great way to build your credit so that you qualify for better loans and credit cards with lower interest rates eventually. In some cases, credit builder loans are even better than a secured credit card simply because there is no administration fee, no upfront deposit, and no credit check. Plus, you’re able to save money and build credit at the same time.

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Cheese offers credit builder loans as part of our credit-boosting suite of features. Click here to learn more about how it works. 

3. Auto Loan Payments

Many people don't realize that making auto loan payments can help improve their credit scores. This is a great way to improve in the “payments history” category if you don’t qualify for (or have) a credit card. 

It's important to keep in mind that late or missing car loan payments can have the opposite effect, so it's vital to stay on top of your auto loan payments. 

Is this the case with a refinanced car loan? Yes, it’s the same. While we don’t recommend refinancing a car loan immediately unless you can score much better (i.e. lower) interest rates, making on-time payments for a refinanced car loan will have the same positive impact on your credit score.

We bet you’re thinking to yourself, “How fast will a car loan raise my credit score?” A car loan can help to increase your credit score, but the exact impact will vary depending on several factors. For example, the amount of the loan and your payment history will both be taken into account. If you have a history of late payments, this could offset any positive effects of the loan.

4. Student Loan Payments

Nobody likes paying back their student loans. However, one of the benefits of making on-time student loan payments is that it can help improve your credit score. 

As is the case with credit card payments and auto loan payments, when you make timely payments on your student loans, you're helping to build a positive payment history. Additionally, on-time student loan payments can help to improve your credit mix, which is another factor that's considered when calculating your credit score.

Having trouble paying back your student loans? Make sure you’re up to date on the Biden-Harris Student Loan Forgiveness plan. While the details are still being ironed out by the government, some borrowers qualify for up to $20,000 in student loan forgiveness.

5. Medical Bills

Generally speaking, paying any bill on time will help improve your credit score. This is because paying bills on time is one of the factors that credit agencies look at when determining your score. So, if you are paying your medical bills on time, that can help improve your score. 

However, there are some circumstances where paying medical bills may not have an impact on your score. For example, if the bill has already been sent to collections, paying it off may not remove the negative mark from your report. In short, paying medical bills can help improve your credit score, but it isn't a guaranteed fix.

6. Rent Payments

Rent reporting is a relatively new practice, and there's still a lot of confusion about how it works and whether or not it's beneficial. Here's what you need to know: rent reporting is when you or your landlord reports your rent payments to the credit bureaus. This can help boost your credit score since on-time rent payments are viewed positively by lenders.

What’s more important to know, though, is that rent reporting is voluntary, so not all landlords participate. And even if your landlord does report rent payments, you’ll need to ensure that you make timely payments for it to positively impact your credit score.

To get your rent payments reported to the major credit bureaus, you’ll want to sign yourself up for a third-party rent reporting company. This is a core part of Cheese offerings, and we verify your rent details with your landlord and report the payments to the credit bureaus. 

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Which Bills Don’t Count Toward Building Credit?

Just as some bills do count towards building credit, paying other bills doesn’t help to improve your credit. Which bills don’t count toward building credit? Here are a few to keep in mind.

1. Cell Phone Bill

Does a phone bill build credit? Unfortunately not (in most cases). Phone companies don't usually report monthly service and usage charges to major credit bureaus, so paying these bills won't have an impact on your credit score. 

However, if you're paying for a phone plan with a credit card, that could help build your credit scores over time. paying your bill on time and keeping your balance low will improve your credit history, which in turn will help boost your credit score.

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FAQ: What cell phone companies report to the credit bureaus? No cell phone companies currently report to the credit bureaus. However, third-party services from Experian will allow you to request that this information is included in your credit report.

2. Utility Bills

Similar to phone companies, most utility companies also don’t report payments to the major credit bureaus. This is because you’re paying for a service provided and aren’t paying off debt owed to a company or individual.

As a result, utility payments will not have any impact on your credit score, good or bad. So, if you're trying to build your credit, you'll need to focus on other things, like making timely payments on your credit card and loan obligations.

3. Car Insurance Payments

Does paying car insurance build credit? Do insurance companies report to credit bureaus? Unfortunately, the answer is no to both questions. Insurance companies don’t report on-time payments to any of the major credit bureaus.

This is because, like utility bills, for example, car insurance is not revolving credit. This means that you're not borrowing money that you'll need to pay back later. Making on-time payments is great and necessary to ensure you stay in good standing with your insurance company. However, it won’t help you build credit.

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Why Do Some Bills Help Build Credit & Others Don’t?

So, why do some bills help build credit and others don’t? For one, bills that don’t help build credit are typically bills that you pay for services rendered, not for a debt you take on. This could include things like your electric bill or your cable bill.

This is because these types of bills aren't reported to the credit bureaus, so they can't be used to help build your credit history (however, as mentioned above, you can request that your rent be reported; it simply isn’t automatically). 

Bills that do help build credit generally have to do with things that you pay on time each month as part of paying back debt (for example, your student loan bills or credit card bill). By making timely payments on these types of bills, you're demonstrating to potential lenders that you're a reliable borrower. 

Ultimately, whether or not a bill helps build credit depends on whether or not it's reported to the credit bureaus. If it is, then it has the potential to help you build your credit history. If it's not reported, then it won't have any impact on your credit score.

How to Build Your Credit in the Long Run

There are no secret hacks when it comes to boosting your credit score. However, if you have poor credit and can’t access credit cards, credit builder loans can be a good option. 

Credit builder loans are designed for people to improve their credit, therefore, applying for a credit builder loan usually doesn’t require a good credit score. This is the same with Cheese. In fact, we don’t do credit check at all. So rest assured! Cheese Credit Builder contributes to 90% of the factors impacting your credit score, such as payment history and credit mix. It strengthens your credit profile in the long run. Sign up for Cheese Credit Builder here and start to build your credit today!