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Being late on your mobile phone payment can have an effect on your credit score, but it won't happen immediately. To prevent a late payment from dinging your credit, know when it will happen and what to watch out for.
Can a Late Mobile Phone Payment Hurt My Credit Score?
With most credit scoring models, late mobile payments won't have an impact on your credit score unless the account goes to collections or the service provider charges off the debt.
Depending on the provider, this likely won't happen if you miss just one payment. But if you miss multiple payments or allow an unpaid bill to stay that way, the provider may close your account and use a debt collector to obtain payment, or simply write it off as uncollectible.
Because your payment history is generally the most important factor in your credit score, a collections account or charged-off debt can have a major negative impact on your credit score. What's more, the negative item will remain on your credit report for seven years.
While that doesn't mean your credit score will stay down for that long—new positive information can help offset old negative information—it can take time and effort to recover and rebuild.
Can On-Time Mobile Phone Payments Help My Credit Score?
Making on-time debt payments can be the most important thing you do to improve your credit score. But mobile phone and other telecom and utility accounts aren't considered credit accounts.
So while defaulting on your mobile phone bill can damage your credit score, paying it on time has, in the past, had no effect at all.
Until now. Experian Boost™† now allows consumers to use their mobile phone and other telecom and utility bills to get recognition for positive payment history and increase their FICO® Score☉ .
Experian Boost is an online tool that allows you to grant permission to Experian to access your bank account and identify utility and telecom payments. Once you confirm that the information is correct and request to have it added to your Experian credit file, you could see an immediate boost to your score.
Based on Experian research, 10% of consumers who didn't have enough credit history to have a credit score became scoreable after using Experian Boost. Also, 75% of consumers with FICO® Scores under 680 saw a credit score increase after using the tool.
Other Ways to Improve Your Credit
Five factors go into the calculation of your FICO® Score. Here's what they are and what you can do to improve on each:
- Payment history: Make it a goal to pay all your credit accounts on time each month. If you have any delinquent or collections accounts, try to get current as quickly as possible.
- Amounts owed: This factor is primarily driven by your credit utilization rate, or your credit card balances divided by their credit limits. If you carry a balance from month to month, work to pay it off. Then try to keep your balance low relative to the card's limit going forward.
- Length of credit history: The more time you spend using credit responsibly, the better your credit score will be. This factor takes time to build, so it's important to develop and sustain good credit habits now for the future.
- Credit mix: Having a good credit mix shows that you can responsibly manage different types of debt. As a result, it's good to have various credit accounts, including a mortgage, an auto loan, student loans, and a credit card. That said, this factor doesn't have as much of an impact as others, so it may not be wise to take out debt just for the sake of building your credit.
- New credit: Every time you apply for a credit account, the lender runs a hard inquiry on your credit report. For most people, the inquiry will only knock a few points off your score. But if you apply for multiple accounts in a short period—rate shopping excluded—it can have a compounding effect. So try to space out credit applications.
If you're late on a mobile phone payment, make it a priority to get current on the account before your service provider sends it to collections or charges it off. Going forward, work to pay your monthly bill on time.
As you build up more on-time payments, Experian Boost can use the data to help increase your credit score. And don't worry if you've made a couple late payments in the recent past—Experian Boost won't include it in your new FICO® Score.
Want to instantly increase your credit score? Experian Boost™ helps by giving you credit for the utility and mobile phone bills you're already paying. Until now, those payments did not positively impact your score.
This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.