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While mobile bill payments don’t directly affect your credit score, but timely payments can boost creditworthiness. Unpaid bills sent to collections can lower your score.
Timely mobile bill payments don’t directly affect credit scores.
When applying for a loan or credit card, your credit score – often referred to as a CIBIL score – plays a crucial role in determining your creditworthiness. Banks and financial institutions closely evaluate this score to decide whether to approve your loan or credit card application. While factors like credit card usage and loan repayments are known to impact credit scores, many people wonder if paying mobile phone bills has a similar effect. Let’s break down the connection between mobile bill payments and credit scores.
Do Mobile Bill Payments Affect Credit Scores?
In India, paying your mobile bill on time does not directly influence your credit score. Leading credit information companies like CIBIL, Experian, Equifax, and CRIF High Mark focus primarily on credit-related transactions – such as loan repayments, credit card bills, and credit utilisation ratios – when calculating credit scores. Utility bills, including mobile phone payments, are generally not factored into these calculations.
However, consistently paying your mobile bills on time can still contribute to your overall financial health by reinforcing responsible payment behaviour. This reflects positively on your credit profile, even if it doesn’t directly improve your credit score.
New Credit Scoring Models Could Change This
Newer credit scoring models are being developed to give lenders a more comprehensive view of an individual’s financial behaviour. These models aim to incorporate utility bill payments, including mobile bills, into credit score calculations, especially for individuals without a traditional credit history.
Such models are already in use in some countries, helping people with limited credit history to build a credit profile based on regular bill payments. However, in India, these models are still in the early stages of development and have not yet been widely adopted by financial institutions.
The Risk of Unpaid Mobile Bills
While paying your mobile bill on time won’t boost your credit score, missing payments can hurt it. If a mobile service provider reports unpaid bills to a collection agency, the outstanding amount may appear on your credit report. This can negatively impact your score, making it harder to secure loans or credit cards in the future.
Once a bill goes to collections, it remains on your credit report for several years, signaling to lenders that you may be a risky borrower. Therefore, it’s essential to treat mobile bill payments with the same level of importance as credit card or loan repayments.