We all know how important it can be to pay our bills on time, particularly utilities. But, there's more to that necessity than the fear of having your energy or water supply cut off – if you don't pay on time, it could affect your credit rating!
Over the past few years, information about regular household bills has been included in people's credit reports, and credit check provider Experian says that millions of people could benefit from a credit rating boost as a result.
The initiative to include this kind of information was designed to widen people's access to credit by working with lenders outside of the traditional banking sector, and it's paying off. Many people have seen their credit rating strengthened simply by paying their regular bills on time, and that can not only lead to future acceptance when applying for credit, but ideally, better rates and terms as well.
Many people don't know that when they're applying for an energy tariff or mobile phone contract, for example, they're actively entering into a credit agreement. In fact, utilities agreements now make up more than one in eight credit accounts on Experian reports, a figure that's growing all the time.
"This is a huge boost for people who have traditionally struggled to demonstrate their creditworthiness, perhaps because they are non-credit users, and have faced financial exclusion as a result," said Andy Wills, data director at Experian Consumer Information Services.
"Lenders rely on credit reports to evidence a customer's borrowing track record and current commitments, so it's essential we work with a wide range of creditors to help give people every opportunity to build a strong, comprehensive credit history. This not only helps lenders extend and manage credit responsibly, but it helps many more people access affordable credit."
So, the message is clear – make sure you pay your bills on time! It can have a dramatic impact on your credit rating, and it could even lead to an improved credit score as a result.
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