Every single month I get a bill from Georgia Power, Georgia Natural Gas, Dekalb County Water, Comcast, and AT&T.
And while most of you probably don’t live in Georgia, my guess is you have a similar list of utility obligations that you have to pay every month.
Utilities are a form of credit, meaning some sort of service is provided in advance with the expectation of payment being made at the end of some sort of billing cycle?
If utilities are “credit”, then why aren’t utility accounts commonly reported to the credit reporting agencies?
Traditionally speaking, most utility providers have stayed away from credit reporting.
There’s nothing legally that prevents utility providers from reporting to the credit reporting agencies, so it’s really a matter of choice.
Having said that, reporting information to the credit reporting agencies doesn’t come without risk.
The minute a utility company (or any other company) reports anything to a credit reporting agency they become obligated under the Fair Credit Reporting Act.
First off, they are required to perform investigations if and when a consumer challenges what they’re reported.
Second, they are required to employ reasonable procedures ensuring the maximum possible accuracy of what they’re reporting.
Third, they’re required to correct information that is found to be incorrect.
The Credit Access and Inclusion Act
Oddly enough, a bill was introduced in the House of Representatives in June of this year that would allow for the reporting of utility and property leasing information to the credit reporting agencies.
The Credit Access and Inclusion Act would amend the Fair Credit Reporting Act such that nothing in the Act could be interpreted as prohibiting the reporting of utilities and rental obligations.
I call it “odd” because there’s nothing in the current version of the Fair Credit Reporting Act preventing the reporting of rent or utilities to the credit bureaus.
Still, even if the Credit Access and Inclusion Act were to be passed it would not mean more utility companies would start reporting to the credit reporting agencies.
The law could not just prevent them from reporting, but wouldn’t require them to report. So, it would still be optional.
No Reason To Report to the Credit Bureaus
There are three generally recognized forms of credit: installment, revolving, and open.
Installment is “fixed payment for fixed period time”, like a mortgage loan or an auto loan.
Revolving is like a credit card where you can use up to some amount (credit limit) and your monthly payment varies based on your balance.
Open credit requires payment in full each month, like a charge card or a utility payment.
When you stop making your auto loan payments, your car gets repossessed. When you stop making your credit card payments, your credit card gets shut down.
When you stop making your power, gas, Internet, water, cable or phone payments, those services get shut off.
You could argue that utility providers don’t have to report anything to the credit bureaus because the threat of losing their services is substantial.
If You Default It Will End Up On Your Credit Reports Anyway
Even if your utility provider doesn’t report monthly activity to the credit bureaus it doesn’t mean you’re in the clear.
If you were to default on any of the aforementioned obligations, not only will your water and power be turned off but the providers will undoubtedly turn over the account to a 3rd party collection agency who will then report the account to the credit reporting agencies.
John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at SmartCredit.com, Mint.com, and the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.