Published in January 30, 2024
In Australia, understanding the factors that influence your credit score is important to maintain a healthy financial profile. Credit scores play a big role in determining an individual’s creditworthiness; this can affect their ability to secure cash loans as well as other financial services including acquiring a mortgage or purchasing a car.
While traditional credit providers, such as banks and credit card companies, directly impact credit scores, there is often confusion about the role of utility debts in this equation.
Utility bills, including those from telecommunications and service providers, can affect your credit score if left unpaid for an extended period. Despite utility companies not being licensed credit providers, their ability to report non-payment (defaults) to credit reporting agencies means that overdue bills may negatively impact your creditworthiness, too.
Utility debts refer to the amounts owed for essential services provided to households or businesses. In Australia, these typically encompass services like electricity, gas, water, and other essential utilities crucial for daily living.
Utility companies in Australia have the authority to report non-payment of bills to credit reporting agencies. This includes services such as electricity, gas, and water. When a consumer defaults on utility bills, the utility provider may notify credit bureaus about the delinquency, leading to potential negative effects on the individual’s creditworthiness.
The duration of utility debts on credit reports varies. Generally, information about late payments or defaults, including utility debts, can stay on a credit report for five to seven years. The exact duration depends on the credit reporting agency’s policies and the severity of the default.
While missed payments on any debt can negatively impact your credit score, the severity of the impact may vary depending on the type of debt. Utility debts, such as unpaid bills for services like electricity, gas, or water, do not directly impact your credit score. However, if these debts are referred to a debt collection agency and the agency reports the information to a credit reporting bureau, it may have an impact on your credit score.
To avoid late payments on utility bills in Australia, consider implementing the following strategies:
Helpful Tip 📢 Did you know that there is an easier way for you to access your credit score? Simply sign up to Tippla and get access to our financial dashboard where you can track your credit score as well as your expenses. The best part? It’s completely free!
Responsible management is the key to ensuring that your credit score does not get affected negatively by your utility dues. Keep in mind that unpaid bills may only affect credit reports if they go to collections, so communicating with your providers during times of financial distress can also help safeguard your credit profile.
While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.
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