Credit Myths Debunked Part 1: Timely Bill Payments Boost Your Credit

FACT: Paying bills on time won’t boost your credit rating. In fact, making bill payments won't be reported to the credit bureaus at all.

I know, I know. You’re thinking, “but that one time I didn’t pay my cable bill, it left a mark on my credit!” and you’d be right. Whereas paying your bills on time does not positively impact your credit score, not paying your bills can have a negative effect on your credit score.

Confused yet?

Don’t worry, it’s not as complicated as it sounds. The fact is, bill payments don’t get reported to credit bureaus unless or until they have been handed off to a collection service, and that usually doesn’t happen unless you’ve failed to pay the bill in question for a significant amount of time.

I don’t have to tell you that it’s good practice to stay on top of your bills. You know that late fees can be enormous and the amount you owe will just snowball the longer you wait to pay it. So, even though paying your bills on time every time won’t give you better credit, not paying them will cost you a lot more money in the long run.

8 Tips To Ensure You Never Forget To Pay A Bill Again

1. Use A Reminder App On Your Phone

- Whether you use iPhone or Android, there are apps galore designed to remind you of anything. All you have to is say, "Okay Google, remind me to pay my Mastercard bill every month on the 15th". Or, you can manually open your reminders app and set it up yourself.

2. Use A Reminder App On Your Smartwatch

- Smartwatches also support reminders. For example, the Apple watch can set reminders via Siri. This can be even more helpful than using your phone because alerts on your watch are far more noticeable than on a device tucked away in your purse or coat pocket.

3. Use Your Calendar App With Alerts

- No matter which digital calendar you use, there is a way to set up repeating events that come with alerts. Set one up for each of your bills so you don't forget a single one.

4. Use The Mint App

- Mint is great for automatically knowing when you need to be reminded to pay a bill. You don't even have to set up your reminders.

5. Use Boomerang For Gmail

- Boomerang is an add-on for your Gmail account which enables you to bring older emails back to the top of the list at any given time. You can use this app to schedule your bill statements to pop up on payday or whenever you pay your bills as a reminder to pay them!

6. Set Up Automatic Payments

- With online banking the norm these days, there's no reason you shouldn't be making use of automatic payments. Set up automatic payments for all your bills on your payday, so you don't have to think about it.

7. Use Bills Monitor On Your Smartphone

- Bills Monitor is an app that will monitor your accounts and remind you when bills need to be paid. It's sort of like Mint, except without the budgeting tools.

8. Make Use Of ohdontforget.com

- This website will send you text message reminders. I know some of you operate entirely in your text messaging app, so have your bill reminders sent where you're looking the most!

In this technological age, there is no excuse to forget your bills. With multitudes of tools at our fingertips, we barely even have to think about bills anymore. Instead, make use of the tools mentioned above and just set it and forget it!

How Your Credit Score Is Affected By Other People’s Bills In Your Name

It’s one thing to stay on top of your own bills, but it’s different when we're responsible for someone else's. We can sometimes find ourselves in this situation when a loved one needs help signing up for utilities or maybe a phone. They might have poor credit or are unemployed and need someone to co-sign for them. But is it a wise decision? Read further to understand how your credit score is affected by other people's bills in your name.

1. Your Credit Score Is On The Line

All it takes is for your loved one to make one late payment for that bill to show up on your credit report, dragging down your score. You need to protect your credit score from negative reporting by staying on top of this new account. The constant monitoring of their utility or internet account can put a strain on your relationship. Especially if they forget to pay, or find themselves in a position where they cannot afford to cover the bill.

2. There Are Potential Fees

If your friend or family member fails to pay their bill and you don't notice right away, you can incur fees. The last thing you want is a collection agency hounding you. If this happens, it can take some time before your credit score recovers, not to mention the potential relational difficulty that could follow.

How To Respond

If someone asks you to put an account in your name, we strongly recommend that you say no. Don't be cold or mean. Instead, offer some guidance on how to get their credit score up so that they can open their own accounts.

One of the easiest ways to boost a credit score is through a secured savings loan or secured credit card. You can send them the credit rebuilding information here. As the saying goes, "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."

Learn more about Refresh Financial's credit builder loan!