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Phone Payments and Your Credit Score

Joe Mahlow avatar

by Joe Mahlow •  Updated on Jul. 26, 2023

Phone Payments and Your Credit Score
A caption for the above image.

The Question: Can a late mobile phone payment hurt your credit score?

The Answer: Yes, it can influence your score, but it won't happen right away.

With most credit scoring models, unless the account goes to collections or the service provider charges off the debt, late mobile payments won't have an immediate impact on your credit score.

This probably won't happen if you miss just one payment (depending on the provider), but if you miss multiple payments or allow an unpaid bill to stay that way, they may close your account and use a debt collector to obtain payment or could write it off as uncollectible. Not great.

Your payment history is generally considered the most important factor in your credit score, and because of this, a collections account or charged-off debt can have a major negative impact on your credit score. Plus, the negative item will remain on your credit report for seven years. Really not great.

That doesn't mean your credit score will stay down for that long though. New, positive information can help offset old, negative information. Just know that it can take time and effort to properly recover and rebuild.

The Question: Can On-Time Mobile Phone Payments Help My Credit Score?

The Answer: Absolutely.

Making on-time debt payments can be the most important thing you do to improve your credit score, considering that payment History makes up such a large percentage of your credit score. But mobile phone and other telecom and utility accounts aren't considered credit accounts.

The Question: How else can I improve my credit score?

The Answer: Consider the Five Factors that influence your credit score and take them on one-by-one.

Factor 1: Payment History - Make it your goal to pay all credit accounts on time each month. If you have any delinquent accounts, try your best to get current as quickly as possible.

Factor 2: Amounts Owed - this factor is driven by your credit utilization rate (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. Aim to keep it below a 30% utilization ratio.

Factor 3: Credit History Length - The longer you spend using credit responsibly, the better your credit score will be. This factor understandably takes some time to build, so it's important to develop and sustain good credit habits now for your future.

Factor 4: Credit Mix - Having a variety of credit typesshows that you can responsibly manage different kinds of debt. It's good to have various credit accounts, including a mortgage, an auto loan, student loans, and a credit card. This factor doesn't have as much of an impact as others though, so it may not be wise to take out debt solely for building your credit.

Factor 5: New Credit - A lender runs a hard inquiry on your credit report every time you apply for a credit account. The inquiry should only knock a few points off your score, unless you apply for multiple accounts in a short period, when it can have a compounding effect. So try to space out your credit applications.

The Question: What are the next steps?

The Answer: Prioritize.

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.

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