Does Paying Gas Bill Build Credit?

If you live in the United States, chances are you pay for gas. So, you might be wondering, does paying your gas bill build credit? We will provide you with everything you need to know about how paying your gas bill affects your credit.

Does Paying Gas Bill Build Credit?

No, paying your gas bill does not build credit because your gas bill payments are not reported to the credit reporting bureaus. Therefore, they do not appear on your credit report and are not factored into your credit score. So, making all of your gas payments on time will not help you build credit.

Since your gas utility bills are not reported to the credit reporting bureaus, making your payments or failing to make them will have no impact on your credit score. So, if you make all of your payments on time, your payments will not help you build credit. Likewise, missing your payments will not directly hurt your credit since late payments are not added to your credit report.

That said, simply because your payments are not reported to the credit bureaus, this does not mean that missing payments cannot hurt your credit.

If you miss enough payments your gas provider may send your account to a collection agency, and the collection agency can cause significant damage to your credit by adding a collection account to your credit report.

A single collection account can cause your credit score to drop by 100 or more points. The higher your starting credit score, the bigger the drop will be. So, make sure to pay your gas bills on time to avoid having your account being sent to collections.

If you fail to pay multiple gas bills and your account is sent to collection, you should keep in mind that if a collection account is added to your credit report, it will remain on there for 7 years from the date you missed your first payment.

After the 7 year period, the collection account will automatically be removed from your credit report. Please keep in mind that paying a collection account will not remove it from your credit report. There is no difference between having a paid and unpaid collection account on your credit report as they will have the same impact on your credit score.

Why Doesn’t Paying Your Gas Bill Build Credit?

Paying your gas bill does not build credit because your gas bill payments are not reported to the credit reporting bureaus, therefore, they do not appear on your credit report nor do they affect your credit score. It costs gas providers a lot of money and requires a lot of legal steps to report accounts to the credit bureaus, so most gas providers simply opt not to report your account status to the credit reporting bureaus.

Does Making Your Gas Bill Late Affect Your Credit Score?

No, making your gas bill late does not affect your credit score because your late or missed payments are not reported to the credit reporting bureaus. That said, although late payments do not appear on your credit report, if you’re very delinquent in making your payments, your gas provider may send the outstanding amount that’s due for a collection agency to collect it from you. In the process of collecting the debt from you, the collection agency is likely to add a collection account to your credit report, causing significant damage to your credit. So, the best thing you can do to ensure that nothing negative affects your credit score is to make your gas bill payment on time every month.

What Are Some Ways to Build Credit?

1. Making Your Credit Card & Loan Payments On Time

Making your payments on time is the best way to boost your credit score. This is so because your payment history makes up 35% of your credit score, so a quick way to improve your credit score is to make payments on your credit cards, personal loans, students loans, car loans, and all other types of credit. That said, missing even a single payment can cause significant damage to your credit, so make sure to make all of your payments on time.

2. Reducing Your Credit Utilization

The second best thing you can do to increase your credit score is to pay down your account balances. Paying down account balances including credit card debt can help you improve your credit score because your credit utilization accounts for 30% of your credit score. So, if you have credit cards with high balances, reducing them can do wonders for your credit score. As a rule of thumb, you should keep your credit utilization (how much of your available credit you’re using) below 10% and never exceed 30%. For example, if you have a total credit limit of $10,000, you should keep your credit usage below $1,000 or 10%. If you use $3,000 (30%) of your available credit, you will exceed the recommended credit usage, lowering your credit score.

3. Keep Old Accounts Open For Longer

The third factor impacting your credit score is the average age of all of your accounts. Typically, the older your accounts, the better your credit score will be. This factor makes up 15% of your credit score. So, to improve your credit score and to build good credit, you should keep old accounts open for longer.

4. Improve Your Credit Mix

Improving your credit mix can positively impact your credit score. To improve your credit mix, you should have different types of accounts on credit reports, such as credit cards, personal loans, student loans, car loans, or mortgages. The more diverse your accounts, the better your credit score will be. This is so because when you handle different types of debt, you’re showing lenders that you have experience managing different types of debt, making you more creditworthy.

5. Refrain From Applying For Too Many Accounts

The final factor impacting your credit score is whether you have new accounts and hard inquiries on your credit report. Whenever you submit credit applications for credit cards or loans, a hard inquiry is added to your credit report. Although a single hard inquiry will only knock down your credit score by a few points, submitting too many credit applications within a short period of time will cause several hard inquiries to appear on your credit report, significantly lowering your credit score. As a rule of thumb, you do not want to have more than 2 to 3 hard inquiries on your credit report at a time. The fewer hard inquiries you have on your credit report, the better this factor will impact your credit score.

What Bills Help Build Credit?

Typically, bills that involve paying debt can be used to build credit. For example, credit card bills, personal loan payments, auto loan bills, home loan payments, and a variety of other loan bills build credit. However, bills such as your water, gas, electricity, sewage, internet, and other utility bills do not build credit. So, even if you were to make all of your bills on time, you would not be building any credit.

The Bottom Line

At this point, you should know that paying your gas bill, water bill, or electricity bill does not build credit because gas, electric, and water providers do not report your payments to the credit reporting bureaus. Therefore, whether you make your payments or fail to make them, they will not appear on your credit report nor will they affect your credit score. That said, if you leave such bills unpaid for a long period of time, your utility provider may transfer the account over to collection. If this happens, a collection agency will likely place a collection account on your credit report, significantly lowering your credit score. So, you should always make utility payments to avoid finding yourself in this situation.