Does Prepaid Electricity Help You Build a Credit Score?
Sometimes making ends meet is difficult. Whether you're experiencing a financial shortfall beyond your control or you made a spending decision that's giving you second thoughts, you may find that your unpaid utility bills are affecting your credit score.
We'll help you understand how that works and how enrolling in a prepaid electricity plan can aid your recovery from a negative credit score.
Traditional Credit Score
When we talk credit scores, most people think of the FICO score from one of the three major credit reporting agencies: Equifax, Experian and Transunion. These agencies collect various data points and your payment history to help lenders evaluate your credit risk. This will impact a lenders decision to extend credit to you through a car loan or a new credit card, for example.
However, it's important to understand that most utility companies don't report your on-time payments to the three credit bureaus. That means on-time payments for your electric bill aren't going to boost the credit score that measures your credit-worthiness.
What Happens if I Pay My Utility Bills Late?
It’s a different story if you fall behind on your utility bills, especially if your account is sent to a collection agency. When your utility account goes to collection agency, the company could report this to the three big credit reporting agencies. That could lower your credit score, which can affect the interest rates available to you or even your ability to borrow money.
Second Credit Score
What if your FICO score is fine, but you were told by your utility company that you have a negative credit score? Perhaps you even have to pay a hefty deposit to connect your electricity service. So what's going on with your credit?
Why Am I Being Asked for a Deposit?
Many utility companies belong to a network where they share payment information about their customers: The National Consumer Telecom & Utilities Exchange (NCTUE). If your utility or phone company is a member of this network, they’ll do a quick background check based on your payment history with other companies in the network. Customers with late payments or non-payment on their NCTUE report may be denied service or asked to pay a deposit.
Regain Control of Your Credit Score
So you’ve been asked to pay a deposit because of your credit. But what if you could regain control of your electricity expenses and rebuild your credit at the same time? One option that may be available to you is prepaid electricity.
How Does Prepaid Energy Work?
Our prepaid plans are a super simple way to get Texas electricity while putting you in control of your bills.
- Set it up: You can create and set up an electricity account with no deposit, no credit check and no long-term contract.
- Pay as you go: You'll pay for electricity ahead of time, on your schedule and as you need it. You can pay by phone, in person or online.
- Keep track: As you go about your week, check the app or your online account manager to monitor your energy usage and how much you have left on your account balance. You’ll also receive text alerts when your “bank” of electricity reaches a certain level, so you can plan ahead and replenish your account before you run into a negative balance (and service is cut off). There are no surprise bills or late fees!
- Rebuild your credit: Keeping your prepaid account up to date could help you qualify for a fixed-rate electricity plan in the future if that's your preference. It’s important to avoid a negative balance on your account to avoid service interruptions which could impact your eligibility.
- Bottom line: Using prepaid electricity is a great way to establish or rebuild your credit, manage your electricity costs and power your home without paying a deposit!