Credit Score News, Tips & Advice
Website CertifiedPrivacy Protected
Credit Score News, Tips & Advice « Credit Scores > Credit Score News > Cell Phone Payments Do Not Help a Credit Score

Cell Phone Payments Do Not Help a Credit Score

By Sally Maison
Published: Saturday, December 12th, 2009

Gloria pays her monthly bills with Verizon regularly, barely missing a payment, since she subscribed with the wireless provider. She expects her credit score to improve because of that, but she sees no improvement until now. She believes that if a company counts late payments, they should reward prompt clients as well. However, that is not how it goes for most wireless providers.

Cell Phone Payments Do Not Help a Credit ScoreVerizon spokeswoman Nancy Stark explains that they only report charged-off or canceled accounts. Any positive or negative account activity is not reported since certain states prohibit them from reporting active accounts to the credit bureaus such as Equifax, TransUnion, and Experian. To make company policies synchronous, Verizon opted to apply the same policy to all its subscribers. Hence, active subscribers who either pay their bills late or on-time cannot expect any change in their credit score.

Although some may argue that cell phone minutes should count in the computation of a credit score since they are much like the credit extended by banks, Verizon’s policy is not unusual. Finance expert Norm Magnuson says the bureaus typically do not record non-traditional data such as utility, cell phone, and cable.

Reporting of account activities by service providers is not governed by federal law, so they are free which clients to report and under what circumstances. Some companies report client activities to other agencies. For instance, Sprint reports active clients to an industry database, which collects information for cellular companies.  Sprint says it only sends out suspended account information to collection agencies which, in turn, report to the bureaus. It is only after a consumer is reported when is credit rating is affected.

Some industry specialists note that AT&T deals directly with the bureaus, but it refused to discuss its policies.

As for Gloria, there is no need to worry that a late payment would hurt her credit rating or a prompt one would improve her score. Verizon subscribers only see their credit rating go down if they delay a payment so long that the company decides to write them off. Before that happens though, Verizon Wireless says it contacts a client and gives him a chance to make good on his bill. If the client refuses to pay, only then would Verizon report to the three bureaus.

Magnuson says a wireless provider typically reports to its collection agency after a subscriber is not able to pay for three to six months. She adds that the cancellation depends on several factors such as age of subscriber account and a client’s payment history.

Nonetheless, finance advisers tell subscribers to stay current on their payment to avoid unnecessary hits on their credit score.

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.