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Do Utility Bills Affect Your Credit Scores? Yes. Turning Up the Heat on Credit Reports

Feel like adjusting that thermostat? If you're worried about your credit score, you might want to put on a sweater instead.

If you’re suffering under debt, know that you have options. Chapter 7 and Chapter 13 could help you get out of debt. Speak with a local bankruptcy about whether Chapter or Chapter 13 can help you.

According to the Minneapolis Star-Tribune, CenterPoint Energy, the largest provider of natural gas in Minnesota, will begin reporting the payment status of its customers in January of 2008. As of next year, major credit bureaus (including Experian, Equifax, and TransUnion) will receive records of which customers pay their bills on time and which ones are behind.

This means that how promptly you pay your utility bill could now affect your credit score.

Sources indicate that approximately one third of CenterPoint's customers were behind on their payments after last year's heating season, meaning that 208,000 households owed money to the utility provider. Apparently, officials behind the decision believe that customers will be more likely to pay if they know their credit score is at risk.

But others insist that that's not a valid argument.

Experts have reportedly pointed out that many families don't pay their utility bills because they don't have the money-not because they're spending it elsewhere. For families on the verge of filing bankruptcy or facing foreclosure proceedings, the monthly utility bill may be a pawn in a larger game.

For anyone with a short credit history (young people, those new to the credit game, those rebuilding credit after bankruptcy filings), even a few missed payments could be disastrous to credit scores. And that can lead to a cycle of expensive loans, payment defaults, and accumulating debt.

But CenterPoint has allegedly argued that, for those who do make timely payments, credit scores can soar. The same groups that stand to lose significantly also stand to gain-as long as they pay on time.

Plus, reports the Star-Tribune, CenterPoint is running out of ways to convince customers to pay them the $106 million dollars owed them.

CenterPoint reportedly plans to include informative inserts in its November billing statements, run radio ads, and print the change in newspapers. But some worry that those measures won't be sufficient to alert customers to such an important development.

Sources indicate that one credit expert suggests including a document for customers to sign to indicate they're aware of the new policy-that's how important it is.

So what about those of you who don't live in Minnesota or have CenterPoint as your utilities provider? Don't assume you're off the hook, reports say.

Since official documentation of utility companies' credit-reporting standards does not exist, there's no way of knowing which companies report consumer action and which ones don't. Your best bet may be to order a free credit report from one of the major national providers, to see what it includes. (You can do that by visiting AnnualCreditReport.com.)

The Star-Tribune notes that customers with special payment plans in place will not be affected by the new policy.


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