Utility companies usually don’t report their customers to credit agencies, however, utilities are considered as a form of open credit because customers are billed after a month’s worth of rendered services. Utility companies have the discretion to report their customers to bureaus like credit companies, and they should.
There are several reasons utility companies should be reporting utility payments to the credit bureaus on behalf of their customers. These reasons directly and indirectly benefit customers, but they help to protect a utility company’s profits and prevent losses. Let’s explore these reasons.
Reporting Utility Payments Helps People to Establish Their Credit
According to Experian, because utility companies have the discretion to report their customers’ payments, customers have the opportunity to build up their credit when they’d otherwise be unable to do so. Those who are starting out in their adult life either don’t have sufficient credit history or have low scores. Inquiries into credit can lower scores, but it’s nearly impossible to build credit without the use of credit cards. Credit card companies don’t want to take a chance on a person with a low credit score. Monthly reports can help clients to build up their credit, which also rewards customers to make regular on-time payments.
Encourage Utility Customers to Raise Their Scores on a Monthly Basis
The problems with damaged credit are many. Collections can stay on credit reports for seven years. This depends on the collection agency’s honesty in reporting the correct date of the first delinquency. Even if a collection is paid off, it’s not a guarantee that it will be removed from a credit report until the appointed time. People don’t always have remedies at their disposal to immediately increase their scores. Reporting customers on a monthly basis can help to repair damaged credit.
Regular Utility Payment Reporting Helps to Prevent Debt Collection Down the Road
If a customer knows that keeping their account current is a good way to keep a delinquency off their credit report, they will be more likely to keep their account in good standing. Utility companies should inform their customers that a delinquency on a credit report can decrease a credit score by as much as 50 points. It can be more if the customer has excellent credit already. The difference between good credit and fair credit is 50 points. This can put customers in great jeopardy because it means greater difficulty in securing employment, finding an apartment or house and higher interest rates on anything they’d like to acquire through loans. Monthly reporting is an excellent incentive to keep accounts current.
It’s Not Difficult for Customers to Keep Their Accounts Current
This is a gracious offer for customers because utility companies are more flexible than credit card companies and others who offer credit. Many times, customers have the option to make payment arrangements. They may also defer payments for a short period of time. Some may even apply for programs to assist those who are in need. It’s entirely possible to avoid collections should customers know how to do so and maintain regular communication.
If you’re interested in learning more about reporting utility payments to the credit bureaus, reach out to Datalinx today. Datalinx LLC has been helping small businesses, property managers, and utility companies report credit for nearly 20 years. A long-standing and trusted credit reporting service, Datalinx is ready when you are.
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