Credit Report Articles

Financial Products That Don’t Build Credit

Man reviewing his bills.

Building credit is important for people of all age and income groups. Your credit score and the information on your credit report can be used to determine your eligibility for loans, loan terms, interest rates, employment and tenancy; so establishing good credit is vital. But sometimes it’s hard to distinguish those financial obligations that matter to your credit score and those that don’t.

Bank Account

You may use your checking and savings accounts to make purchases, pay bills and accrue wealth; but the funds in your accounts have no bearing on your credit score. Think of it this way, your bank account is not associated with a line of credit because the funds in your checking and savings belong to you.

Utility Bills

It’s a common misconception that your monthly electric or cell phone bill contributes to your credit score; however that is not the case. While utility companies and cell phone providers may perform a credit check when you open an account with them, they do not report your account status to the credit bureaus. One caveat worth noting is that failure to pay your cell phone or utility bills could cause them to be sent to collections, which is on your credit report.

Car Insurance

Similar to your utility bills, you make an agreement with your insurance provider to pay a monthly premium in exchange for coverage. Despite of this, your account with the insurance company is not on your credit report. Your payment history is not delivered to the three credit bureaus, so your policy does not impact your credit score.

Understanding which financial products have no bearing on your score is important when you’re trying to establish a strong credit history. Knowing which factors will not influence your three-digit number will allow you to seek out products, such as credit cards or loans that are game changers. Build a credit history slowly and soon enough you will be in the running for competitive rates.