Watch out, these companies may only hurt your credit score

The only thing many cable, utility and cellphone companies do for your credit score is hurt it.

A recent survey of more than 1,000 adults by TransUnion found “widespread confusion about which payments are included in a consumer’s credit history,” as most consumers mistakenly believe that many of the bills they pay each month are routinely reported to the credit agencies — when in fact they aren’t. More than half of consumers (53%) believe that cable and Internet companies routinely report their payments to the credit bureaus, 54% think utility companies do, 52% believe cellphone companies do, and just under half (48%) think their landlord does.

The reality is much different: Many landlords, cable/Internet, utility and cellphone companies are only reporting when you don’t pay a bill on time (and some don’t report at all) — but are not reporting all of those months when you do pay your bills on time, says Ken Chaplin, senior vice president at TransUnion.

That’s different from what most mortgage, credit card and car loan companies are doing, he notes. Typically, these lenders report all of your payments — both the on-time and late payments — to the credit bureaus.

HBO to launch stand-alone streaming service

(3:36)

HBO will launch a stand-alone Web streaming service next year aimed at the 10 million Americans who only subscribe to broadband. Photo: HBO/”Game of Thrones”

This matters to consumers because the most important factor in determining your credit score is payment history (this makes up 35% of your total credit score), so a long series of on-time payments will help boost or maintain your score, says Nick Clements, the founder of price comparison and financial education website MagnifyMoney.com. That means that if you’re a consumer who always pays her bills on time, the companies that regularly report on-time payments to credit bureaus will help you boost and/or maintain your score, but those that don’t report the on-time payments won’t.

Indeed, more than three in four people surveyed by TransUnion (77%) say their credit scores would potentially benefit if rental payments were reported to credit bureaus; fully 68% say this about cable bill payments, 67% about cellphone bills and 69% about utilities. “This is very frustrating for consumers,” says Credit.com’s director of consumer education, Gerri Detweiler.

Furthermore, those companies who only report on late payments “can never help your score, but can dramatically hurt it,” says Clements — as they are only reporting bad behavior (i.e. late payments) and not good behavior. One instance of a 30-days-late-or-more payment can have a far more dramatic impact on your credit score (sometimes an up to 80 to 100 point drop) than several on-time payments, he adds.

It’s important to note that not all late payments appear on your credit score, says Mike Sullivan, the director of education for nonprofit credit counseling agency Take Charge America. Typically, no lender — even those that regularly report your payments — reports on a bill that’s less than 30 days late, he says, so even if you pay your credit card bill 29 days late, that late payment isn’t likely to appear on your credit report (though, of course, you may face late fees).

One way to tell which companies are reporting your payment information to the credit bureaus — and what they are reporting — is to get your credit report from AnnualCreditReport.com, says Credit.com’s Detweiler. You can also call the company and ask about their policy, says Chaplin.

Watch out, these companies may only hurt your credit score