Does paying a phone bill build credit?

It might cross your mind as you pay your cell phone bill or see the AutoPay amount leave your bank account: Can paying a phone bill build credit?  

Your phone bill can affect your credit, but the path isn’t totally straightforward. Knowing a bit about how credit scoring works will help you build and protect your credit score while paying for phone service.  

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Phone bills don’t show up on your credit — unless you put them there 

Certain types of lenders — think credit card issuers, mortgage companies and other lenders — report your payments and account details to one or more credit bureaus every month.  

You may be familiar with the three major credit bureaus: Equifax, Experian and TransUnion. Those bureaus build reports using that data to show how you’ve handled credit over time. The credit scoring companies then apply a formula to your credit report data to estimate how likely you are to reliably pay debts in the future. That estimate is your credit score. In general: 

• Positive actions like paying on time and not using too much of your credit limits will help your score. 

• Negative actions like skipping a payment or using too much of your credit limits will damage your score. 

Here’s the catch: Not every type of recurring payment gets reported to the credit bureaus. Cell phone bills, utility payments and rent typically don’t. You’ll have to take some sort of action to see your credit score benefit from those payments.  

Add phone payments to your credit reports with a service

You can proactively add recurring payments, like your phone bill, to your credit reports by using a self-reporting service. Here’s a quick look at the two main options:  

How it helps your score: By getting your cell phone payments reported to the credit bureaus, you’re adding more data to your credit reports and beefing up your credit history. Both can build credit, as long as you’re not adding negative data like missed payments.  

What to watch out for: Not every phone plan will be eligible, especially prepaid plans. And the effect will be limited, because these services don’t report to every credit bureau and influence every credit scoring model (there are many). When a potential lender goes to check your credit, it may use a different scoring model or a different credit bureau’s data.  

Use a credit card to pay your phone bill 

You can build your credit in an indirect way by paying your phone bill with a credit card, which you then faithfully pay off in a timely fashion. There may be restrictions or tradeoffs: For example, Verizon accepts only its branded Verizon Visa credit card for AutoPay, otherwise you must link a bank account. AT&T allows a debit card or its branded credit card from Citi. Both companies allow you to pay with a different credit card, but you’ll sacrifice the AutoPay discount if you do.  

How it helps your score: Credit card payments are reported to the credit bureaus. By using and paying off the card every month, you’re contributing to your history of on-time payments — and that’s the biggest influence on credit scores. You might also score cash back or other credit card rewards, depending on the card you use.  

What to watch out for: Avoid using a credit card if there’s any danger you might miss a payment, which can heavily damage your score. Also, be aware that if you don’t pay your credit card balance in full each month, you’re essentially signing up to pay interest on your phone bill.  

Finance a phone to build credit  

Because wireless carriers don’t routinely report to credit bureaus, financing through them won’t affect your score. But you can finance through the phone maker or a retailer like Best Buy by opening a credit card, a line of credit, or a buy now, pay later account.

How it helps your score: Credit cards, lines of credit, and payment plans do get reported to credit bureaus. That gives you a chance to build positive credit history by paying on time and in full every month.  

What to watch out for: The seller might check your credit through what’s called a “hard inquiry.” That can cause a small dip in your score, but it fades after a few months and disappears from your credit reports altogether after two years. 

What happens if I don't pay my phone bill? 

Unfortunately, it’s much easier to hurt your credit score by making mistakes with a phone bill than it is to help it by making on-time payments.  

With prepaid plans you’re insulated from score damage because you pay up front for service. If you don’t pay, or your payment method fails for some reason, the service provider will simply shut off service. Once you pay, your service should be restored. 

With postpaid plans, however, you’re billed at the end of your month of usage. And although service providers don’t typically report your regular payments to the credit bureaus, they can take actions that hurt your wallet or credit score if you don't pay: 

• If you fail to pay the full amount by the due date, your provider may apply a late fee. The fee can vary by state and by provider, but the policy should be stated somewhere on the company’s website.  

• If you haven’t paid in full at 30 days past due, the company can report your account as “delinquent” to the credit bureaus. Scoring formulas interpret that as a sign you might be heading into financial trouble, and they lower your score to reflect that. The company can keep reporting you delinquent every month the bill goes unpaid — and the score damage gets worse as your account goes 60, 90 or 120 days past due.  

• Eventually, the company is likely to send your account to collections, which is another huge negative mark on your credit and can drop your score further.  

What to do: Pay the bill and any late fees as soon as you can. Then contact the provider and ask if it will rescind its reporting of the account as delinquent — if you’ve rarely or never missed a payment, it might agree. It’s important to ask for this, because most negative marks can stay on your credit for seven years (although the impact to your score fades over time).  

Frequently asked questions about phone bills and credit