Should Credit Scores Include Utility and Cellphone Bills ?

A proposal is under consideration to change the way credit scores are calculated: It may include non-loan payments such as rent, utility, cable and cellphone bills.

If you don’t pay your utility bill the utility company usually will send it to a collection agency. The collection agency will then report it to the credit report agencies and the unpaid debt will become part of your credit report. The irony of utility bills and other credit-like payments, such as cellular telephone bills, is that if you don’t pay the bill the negative information will become part of your credit report. But if you always pay on time, the positive information typically isn’t reported and so doesn’t help your credit history.

So, some agencies believe that reporting the positive information would be very helpful for many consumers, particularly those trying to establish credit for the first time. That includes young people, new immigrants, and recently divorced consumers, especially women.

Opponents, however, say consumers are better off when credit bureaus don’t know too much about them. Increasing the number of accounts that credit reports track mathematically increases the chances that consumers will make a mistake and be penalized for it. If they miss payments on utility bills in the future, that could lower their credit score, whereas it might have no impact on their score now.

In any case, there are many legal and business issues that must be resolved before the bill takes effect.