Utilities and Bills on Credit Reports: Habits to Change in 2016


There are some big changes coming to credit scoring in 2016. One of the big changes will be non-traditional types of credit will be considered when calculating your score, like utility and phone bills. FICO has been working on this alternative FICO model since 2013. Currently 53 million consumers cannot be scored through traditional means. This means banks are missing out on potential customers who pay their utilities and phone bills on time and could be considered a good risk.   


Currently in a pilot phase last November 2014, Fair Isaac has estimated 15 million more consumers can be assessed with a new scoring system, FICO XD. This means banks can get new customers.

FICO first performed a “retro” analysis, similar to the type of analysis that banks perform when they decide whether or not to implement a new credit-scoring model. They look at past clients, score those clients with the new system, and see how their portfolio performs. FICO looked at credit card applications of more than 2.5 million consumers submitted between 2011 and 2013. 55 to 60% of these credit card applicants could be scored using the new model, in contrast to the 33% rate FICO had initially estimated. Of this percentage, 35 to 50% of these credit card applicants would score above 620, the minimum threshold some credit card issuers require for approval.

The FICO XD scoring range, not coincidentally, follows the traditional FICO model of 300 to 850. With a parallel scoring range, lenders don’t have to readjust their thinking/criteria when looking at the new model; i.e. a 700 score in FICO XD is equivalent to a 700 FICO 09 (the latest incarnation of FICO).

Under the pilot system rolled out in the 12 banks last November, consumers who are approved using FICO XD and pay their credit card bills on time for at least six months will then receive regular FICO scores — which is nothing special about FICO XD: typically, regular FICO scores can be calculated when a consumer has at least 6 months of payment history on traditional types of credit such as mortgages or credit cards.

Widespread Adoption of FICO 9

There are other things afoot in the credit scoring industry; experts predict that big banks will start adopting the FICO 9 credit scoring system this year. In older credit score models, utility and phone on time payment history do not count — unless the bill is so delinquent that it goes to collections. A bill in collection has a very negative effect on your traditional credit score, lowering it as much as 100 points.

With the model currently used by lenders, FICO 8 (or even older models of the FICO score), consumers did not get a reward for paying their collections – paid collections were considered just as bad as unpaid collections when it came to the damage they could inflict on a credit score. However, with the adoption of FICO 9, paid collections will not be considered as negative when scoring a consumer’s report.

How the Changes Will Affect You

Currently, when you decide to turn on the power or switch wireless providers, your credit is pulled. It’s not only your credit from traditional credit bureaus that is pulled – data about your utility and phone payment history is stored in consumer databases, most likely National Consumer Telecom & Utilities Exchange (NCTUE), a division of Equifax and LexisNexis. The data in NCTUE and LexisNexis makes up the bulk of the information used to calculate your FICO XD score.

If you have eschewed traditional credit until now because you’re young, have had bad experience with credit in the past or you just haven’t had a need for traditional credit products, paying your utility and phone bills on time is more important than ever: if you are unable to be scored with a traditional FICO product, lenders will most likely depend on your FICO XD report.


While paying your bills on time is always the correct thing to do, both financially and morally, some consumers may have been getting by with bill-paying habits that haven’t been properly reflected in their credit scores, both positively and negatively.

A consumer who is in the habit of paying their utility bills more than 30 days late will not see the same effect on their traditional FICO credit score as if they were paying a credit card bill more than 30 days late. However, should they need to be scored, this consumer will not reap the benefits of being scored by FICO XD.

A consumer, who is in the habit of paying their phone and utility bills on time but has no other credit, will reap the rewards of their timely payments under FICO XD.

It’s now worth it to work with those collection agencies and make a deal. Consumers who have unpaid utility bill collections and settle these accounts will see a marked rise in their FICO 9 scores.

Related Articles:

Can Autopay Help Your Credit?

FICO Introduces New Scoring System to Help People With No Credit

New FICO Score: What It Means For You

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