These are 4 ways in which utility bill payments impact your credit score? Details here

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credit score. So, utility bills can impact your credit score. Unlike credit cards or loans, utility bills are not reported to CIBIL, unless they are sent to collections.

Payment history: If you regularly pay your utility bills, it will not directly give an impetus to your credit score since timely payments are not usually reported to credit bureaus. However, in case you miss payments and your utility account goes into collections, it can have a negative impact on your score. Debt-to-income ratio: Your utility bills are seen as part of your overall financial obligations.

While they may not directly affect your credit score, they can indirectly impact your ability to procure loan. Lenders often consider your debt-to-income ratio when evaluating your creditworthiness. If your utility bills are consistently high compared to your income, it could affect your ability to seek loans or credit cards.

Rental applications: Some landlords may check your utility payment history as part of the rental application process. If you have a history of late payments, it could make it more challenging to secure a rental property. ALSO READ: How you can negotiate lower interest rates with a good credit score? Credit inquiries: In some cases, utility companies may perform a credit check when you apply for their services, such as electricity, water, or internet.

These are known as hard inquiries and can temporarily lower your credit score. However, the impact is typically minimal compared to other factors such as payment history and credit utilisation. While utility bills themselves may not directly impact your credit score, managing them responsibly can indirectly contribute to maintaining or improving your creditworthiness.