Does paying monthly bills build your credit history?
Regularly paying bills like your rent, electricity and other utilities won't get reported to the three credit reporting bureaus, but... not paying them will.
Do utility payments affect my credit score?
Sometimes. Most utility companies will not report your payment history to the three credit bureaus, because you're paying for services rather than meeting payments on a line of credit. However, utility companies and landlords are very likely to enlist a collections company to chase up any unpaid bills, and collections do get reported to the bureaus. If you are unsure of whether your electricity or gas company reports to the credit bureaus, you can contact them to find out or request a copy of your credit report to see if any recent activity or delinquencies are being posted.
Should I pay utilities with a credit card?
Yes. However, your utility company may charge a fee if you want to process payments on a credit card. It's a nice feeling to know that all of your bills are being paid on time, because you've set them up to be paid off by your credit card every month. But beware of any hidden costs. Some utility companies will charge a fee for processing the payment on a credit card, and you'll be paying extra in interest if you don't pay off your credit card balance in full every month.
You may want to use a debit card instead to automate your monthly bills. Paying utilities with a debit card are not typically charged an extra processing fee. Just be sure to have enough funds in your checking account to meet those payments on their due dates.
An easy way to make sure you have enough money in your account is for you to budget bills in advance and move your bills closer to your payday.
What on-going expenses can help your credit score?
In addition to utilities, some bills and typical recurring purchases such as monthly subscriptions, groceries, dining, clothes, travel and gas can also be paid with a credit card with no processing fees involved. Not only will you benefit from the rewards, but your credit score can improve if you keep your balance low by paying more than your minimum required balance. If you are considering putting monthly expenses like utilities on your credit card, it's important to consider how much you'll end up paying once you take fees and interest into account.