Menu
Log In
Sign Up

Do Utility Bills Affect Credit Scores?

Sandra MacGregor

Apr 02, 2021 5 min read

Share on Facebook
Share on Twitter
Share on Linkedin
Do Utility Bills Affect Credit Scores?
Article Contents

    As you sit down to diligently pay your monthly gas and hydro bills, have you ever wondered if your utility bills appear on your credit report? Utility bills, like hydro and gas, aren’t included in your credit report because utility companies don’t generally report payments to credit bureaus. However, there’s a big caveat. Your utility bills can negatively affect your credit score if you stop making payments and the utility company sends your unpaid bills to a collection agency. 

    How Can a Utility Bill Hurt Credit Scores?

    Generally speaking, Canadian utility companies do not report a client’s payment history to the country’s two major credit bureaus (Equifax and TransUnion). Of course, if your payment history is not reported to a credit bureau, then there’s no way utility payments can influence credit scores. However, all bets are off if you stop making timely payments. 

    If your past due bills start to pile up and it looks like the utility company won’t be able to get the money you owe them, they can decide to send your debt to a collection agency. This is also known as charging off debt. A collection agency is a company that specializes in recouping unpaid debts. 

    Once a collection agency assumes the debt, they will usually send a record of your account and your history of non payments to Canada’s credit reporting agencies. That record will then become part of your official credit report and at that point it will start to damage your credit score. Credit reports show any of your accounts that have been sent to collections and whether your amount owing has been paid or unpaid. The longer it takes you to make payments, the longer and more severely your credit rating will be negatively affected. 

    Not sure what your credit score is?

    You can get your credit score FOR FREE by signing up for Borrowell. See how your financial habits are impacting your credit score and get coached on how to improve your score. Signing up only takes 3 minutes.

    Get Your Free Credit Score

    What Happens If My Utility Bill is Sent to Collections?

    Once a collection agency assumes the debt, they will usually immediately report the debt and your history of non payment to a credit bureau. It’s in their interest to report your debt because threatening your credit score is one form of leverage they can use to encourage you to make good on your debt. 

    Before your account has been sent to a collection agency, the utility company should send you a notice saying that your debt is about to be charged off to a collection agency. At that point, if you have the ability to do so, you can reach out to the utility company to see if you can come up with a payment plan so that you can prevent your debt from being transferred to the collection agency.

    Once the debt goes to the collection agency, they will then begin to contact you to get payment. This can be a very stressful situation and even though there are strict rules in Canada that collection companies must follow when collecting debt, many have a general reputation as being very aggressive. (If you think a credit collection agency is being too aggressive and infringing upon your rights you can contact the Financial Consumer Agency of Canada). 

    On the bright side, many collections agencies may offer to charge you less than the amount you actually owe in return for quick payment. It’s always best to make a payment as soon as you can to stop your credit score from falling further. It’s important to note that there are set times that things like bankruptcies and collection agency debt will stay on your credit report. In general, a collections debt will stay on credit reports for six years from the date of your last payment. However, if you don't pay off the amount, it could stay on your credit report indefinitely, which is why it’s vital to make all efforts to pay off your outstanding debt. 

    Can Utility Bills Help Me Improve My Credit? 

    While paying your utility bills doesn’t directly affect your credit score, using a credit card to pay your bills can help you improve your credit score. This is, of course, only if you pay your credit card balance on time. Credit card providers report your payment history to credit bureaus, and payment history is the largest factor that impacts your credit score. So as long as you make your credit card payments on time and don’t carry a massive balance, it can be a good idea to use a card to pay your utility bill. Be aware, however, that many utility companies in Canada charge a fee (usually about 1.75%) if you pay with a credit card, so you should balance the cost of the fee against the benefits of building your credit rating. 

    Some Canadian utility companies track their customers’ utility payment history, which means that not paying your utility bill could make it harder to get set up with a new company. Furthermore, some utility companies (such as those in Ontario) do often charge new customers a security deposit to set up an account. That fee is waived, however, if you can provide a letter proving one year of good payment history with another electricity or gas utility in Canada, which is all the more reason to stay on the good side of your utility provider.

    What else can I do to improve my credit? 

    Though paying utility bills may not directly improve your credit score, there are plenty of other ways to consistently improve your credit rating. Here’s just a few:

    • Get to know more about what actually makes up your credit score, so you can focus on improving the factors that are the most important (like payment history and credit utilization).

    • Always pay bills on time; late payments can lead to a lower credit score.

    • Keep your credit utilization ratio below 30%.

    • Don’t cancel your old credit cards; credit history is a big part of your credit score.

    Want to improve your credit score?

    Borrowell gives you personalized tips and coaching on how to improve your credit score. Sign up for free to get your credit score. It only takes 3 minutes. No credit card required!

    Get Your Free Credit Score

    Article Contents

      More Credit Score Resources

      Do Overdrafts Affect Your Credit Score?
      Do Overdrafts Affect Your Credit Score?

      If you fail to repay your overdraft, it could be sent to collections, show up on your credit report, and negatively impact your credit score.

      Janine Devault

      Mar 20, 2021

      Learn More

      How much does my credit score drop if I miss a payment - image
      How Late Payments Impact Your Credit Score

      Payment history makes up 35% of your score. One late bill payment can decrease your credit score by up to 150 points, according to Borrowell data.

      Evan Miersch

      Jan 28, 2021

      Learn More

      A woman sitting at a desk with a laptop drinking coffee
      How Long Does Information Stay On My Credit Report In 2021?

      Since Borrowell offers free credit reports for Canadians – we get asked all the time: “How long does information stay on my credit report?”

      Rachel Surman

      Jan 05, 2021

      Read more


      Products
      Free Credit ScoreCredit CardsLoansMortgagesBankingInsuranceFree Bill Tracking

      Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.


      2014-2021 Borrowell® | The Credit Is All Yours!