6 Recurring Expenses That Don’t Help Your Credit Score

Photo (cc) by LendingMemo

Isn’t it ironic how you can have an excellent payment history, but poor credit?

Your credit score is one of the most prized possessions in your financial profile, and a low score can be very detrimental to your financial well-being when you need to borrow money. It doesn’t help when you desperately want to improve your score, but are in the dark about how to move forward.

Here are six expenses that will not facilitate your efforts to build your FICO score, the score most commonly used by lenders:

1. Household expenses

You’d think the opposite would be true because these companies usually require a credit check before they’ll do business with you. It doesn’t matter if you make timely payments each month because the companies don’t report to the three major credit bureaus. However, there are exceptions:

  • Rent. A broken lease that results in a judgment or an eviction may be reported to the credit bureaus and affect your FICO score.
  • Cable and utilities. Past-due bills will be reported to the credit bureaus if they remain unpaid after a substantial amount of time and/or the bill is sent to collections.
  • Cellphone. Some cellphone companies do report your regular payments. Breached contracts with an outstanding fee or a delinquent account that calls for termination can damage your credit score.

2. Support obligations

Are you required to provide monthly support to your children or former spouse? The credit bureaus likely don’t know about that either.

However, fall far enough behind and your arrears will be reported to the credit bureaus if a state child support enforcement agency gets involved. Fail to pay and it can damage your credit score.

3. Tax payments

Do you make property, state or federal tax payments during the year? If you pay on time, this information won’t be reported either. But if a lien or wage garnishment results because you don’t pay, it will show up on your credit report.

“[H]aving a [federal] tax lien on your credit report is a serious negative item and it could remain on your credit report for seven years after the tax bill is paid, unless you take steps to have it withdrawn,” says Credit.com.

4. Contractual agreements with small or mid-sized companies

Paying for a monthly service? Your record of good payments won’t be reported. If you stop paying, the company may simply stop providing the service and write off the delinquent account as a bad debt expense. But if they send the bill to a collection agency, that will hurt your score.

5. Insurance premiums

Because premiums are usually paid in advance, health, auto, homeowners and life insurance companies don’t typically report transactions to the credit bureaus either. If you don’t pay, eventually they’ll simply cancel the policy.

6. Medical bills

Have you arranged a payment plan with your health care provider for the portion of bills not covered by health insurance? The balance and payment activity don’t show up either, unless, of course, you’re delinquent. Says Bankrate:

Your monthly payment to a doctor or hospital will not be reported, but failing to pay will result in the bill being sent to a collection agency. That agency may report the account to your credit bureaus. Some, albeit only a few, hospitals will assign the bill to a collection agency but advise the agency not to report the bill to your credit report. The collection agency will attempt to collect the debt but not create a negative mark on your credit report.

VantageScore 3.0 to the rescue

The VantageScore is a direct competitor of FICO, and calculates your alternative credit score using the following factors:

  • Payment history — 40 percent.
  • Depth of credit — 21 percent.
  • Utilization — 20 percent.
  • Balances — 11 percent.
  • Recent credit — 5 percent.
  • Available credit — 3 percent.

It ranges from 300 to 850, and requires little to no credit history to calculate a score. This is a benefit for those 64 million Americans without a traditional credit score. Says CNN Money:

Credit scoring company VantageScore is trying to shed light on this mysterious group with its newest scoring model, which it estimates can assess an additional 30 [million] to 35 million people who were previously unscoreable. It does this by looking at 24 months of credit history, rather than six months, and by considering alternative data like rent and utility payments and public records when available.

FICO also has a special mortgage credit score that reflects timely payment of rent and other obligations.

If you must apply for a loan, find out which credit score the lender is using.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How to Get Rid of 6 Hard-to-Sell Things
How to Get Rid of 6 Hard-to-Sell Things

Find out where to sell, donate or recycle items — and feel good about it.

8 Surprising Things No One Tells You About Retirement
8 Surprising Things No One Tells You About Retirement

Knowing what to expect can help you prepare for — and adjust to — life in your golden years.

Half of All Retirees Say They Fear This
Half of All Retirees Say They Fear This

Chances are good that you share this fear. Here’s a way to overcome it.

These 5 Laptops Have the Best Battery Life
These 5 Laptops Have the Best Battery Life

Need a laptop that runs as long as you do? Check out these models.

The Annuity Everyone Needs — and Anybody Can Get
The Annuity Everyone Needs — and Anybody Can Get

This simple strategy can put more money in your pocket during retirement.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Bank Accounts With Extra Perks for Seniors
7 Bank Accounts With Extra Perks for Seniors

These accounts offer exclusive discounts and other perks — including interest — to older customers.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.