One Unpaid Bill Is Not Going To Ruin Your Credit Score

We get many tales of consumer disputes and a common situation we hear of us is where customers are dissatisfied with a product or service, refuse to pay until its fixed, and the business, usually a small business, threatens to “ruin” the customer’s credit score over the item. (For some reason, the word “ruin” is always used).

Now, FICO is notoriously cagey about what goes into the credit score black box but they have revealed the different factors that go into a score and their proportional influence. Payment history only accounts for 35% of your credit score. The “burn” from the dispute represents a then smaller part of that 35%. How big a threat are they making really? “I’m sorry, sir, we’re going to have to deny your mortgage. I can see here that you never returned Good Will Hunting.”

Don’t think it’s without repercussions, though. Your score dropping to 620 from 659 could result in $163 more monthly for a 30 year mortgage. However, the small amounts that we usually hear about being haggled over are unlikely to result in such major score shifts. If you’re not buying a house or a car or applying for a credit card anytime soon, you have even less to worry about.

Consider further that “dinging” your report, as it’s called, hurts the retailer too. We found information indicating it could cost at least $25 for a business to push through a negative onto your credit report. And while it’s a bit of a pain in the butt, it is possible to get negative items removed from your credit report.

Far be it from us to recommend payment delinquency, but oftentimes businesses using the, “I’m gonna RUIN your credit report” threat are just being bullies. A chuckle followed by a, “Is that all you got?” may be an appropriate response in these cases.

What’s In Your Score [myFICO]

Delete Negative Items From Your Credit Report
Credit Reports: How Long Different Items Stay
Don’t Pay For Your Credit Report
(Photo: Getty)


Edit Your Comment

  1. Crazytree says:



    a late will F up your score no matter what this article says.

    it will also stay on your credit report for a minimum of seven years.

    so basically every time you need to get a professionally reviewed loan [read mortgage] in the next seven years you’re going to have to explain why you forgot to pay that $63.83 Old Navy credit card bill.

    The argument that “dinging hurts the business too” makes little sense. They don’t care, they’ll ding you until the cows come home AND THEN send the debt collectors after you.

    The only way to prevent the type of extortion that is described in this article is by knowing your rights under the FDBA and the FDCPA and threatening statutory damages if they put incorrect information on your credit report.

  2. Cowboys_fan says:

    After receiving my credit report, I noticed none of my typical bills were on there(electric, cable, internet, or phone including cell), and I have been late more often than on time. All those years I thought I was killing my credit when in fact, it had no influence whatsoever. I know it can show up anytime, but I don’t think they report as often as they want us to believe. Now all credit cards, store cards, student loans, etc were all there, so actual credit shows up, I just think its too expensive to report a phone bill. Or maybe I just got lucky.

  3. ShadowArmor says:

    There has to be basis for a mark against you — one can’t just call the bureaus and send out marks wherever they please. If a contractor has not completed work as stipulated in the contract, then you are well within your rights to withhold payment.

    But most people do buckle under those sorts of threats, and it usually helps the company cheat you.

    You can of course reply with a similar promise to file with BBB and State Atty. General.

  4. UpsetPanda says:

    Just because it seems like you can get by without getting “dinged” doesn’t mean it’s an excuse to be late, or to put it off to tomorrow. I pay my bills right when they come – I know I’m a procrastinator so I have to make sure that check goes into the mail right away.

    Question for all of you: Paying online vs. paying by check. Obviously, it’s faster to pay online, but is it similar to a check in that it only counts as a payment once the company you pay to processes the transaction? Or is it instantaneous, and it is a better way for procrastinators to pay?

    Here’s an example. If my bill is due Friday, and there is no way a check can get mailed and processed in time for it to be counted on time, if I get online and pay right now, am I on time or is it late if they don’t process that I paid online until Friday?

  5. mtaylor924 says:

    @Cowboys_fan: Yeah, it was also surprising to me the first time I realized these standard bills weren’t on my credit report.

    That brings to my mind a larger issue though – why do companies have the right to “ding” your credit report when they don’t provide credit? I can see a bank reporting late mortgage payments, or late credit card payments – but other things shouldn’t go there, like phone bills, cable, etc!

    For example – a few years ago I needed surgery, but my crappy student health insurance took months to process and approve my claim, and then only covered 60% of the bill! The hospital didn’t care that the insurance took so long to come through, they sent me to collections as soon as the insurance company paid their 60% without even giving me a chance to set up a payment plan for the rest. I realize they were just trying to collect payment for services rendered – but they didn’t extend “credit” to me in any way – thus I don’t see why they get to make a black mark on my record.

    Does anyone know the legal requirements (if any) for a company to have the right to negatively affect a credit report? I could easily see this abuse being extended beyond late payment or non-payment of bills, with companies threatening to affect credit reports and scores to extort money out of people.

  6. mtaylor924 says:

    @MissJ: I know that with most banks, online payment still takes a few days to be fully processed. With my bank, the online bill pay section will tell me how long it takes for the bill to be fully payed and processed by the company receiving payment. Depending on how tightly integrated my bank is with the company, payment can be processed by next day or it can take up to 5 business days.

  7. bohemian says:

    It seems to be hit or miss as to what ends up on your credit report and what doesn’t.

    I have had a couple of fraudulent or disputed items over the years. Even with proof on my side the credit agencies couldn’t be bothered to remove them. I had one on my credit report that I had paid, sent them proof of payment but citibank could not be bothered with telling the bureaus I paid the bill so they would not take it off – ever. It fell off my report before anyone would flag it as paid.

  8. Ben Popken says:

    This post is written in the context of a dispute with a business where rather than fix the problem they’re threatening to ruin your credit report. It should be read in that context as well.

  9. FightOnTrojans says:

    That depends on a variety of factors. I use my bank’s online bill pay to pay some of my bills. Some of those bills that I pay with it have an “e-bill” arrangement with my bank in that they receive the payment the day I choose for it to be sent. Others receive a paper check or other electronic payment and it is usually received in a matter of days. The bank’s website gives me an estimate on when the check/payment will be processed at the other end, based on the history it has with that company. I also can go back and look at my previous payments and match up when the payment was sent versus when the payment was received by the company versus the payment processed date on my last statement, and make my own assumptions.

    I also use a few of the companies’ websites to make payments directly to the company. Those websites will tell you what the time constraints are. For example, one credit card says that it will consider the payment sent as received that same day if I do it before 1pm. Needless to say, that has saved my ass a few times when I remember that the bill is due that day during lunch. So now I know what day the statement comes out, I log on, and set up the payment in advance so that it goes out when I want it to (usually payday), and well ahead of the due date. Then, when payday comes around (once a month for me), all my payments go out for the month, and whatever is left over is what I have to live on for the month.

  10. Buran says:

    @bohemian: I think that’s when complaining to the state AG, BBB, etc., is warranted. They’re disseminating proven-to-be-incorrect info about you.

  11. kamikasee says:

    I believe that a bill has to be more than 30 days late before it can be reported on your credit report. I try to pay bills on time, but with the vagaries of online payment postings (@MissJ), they are not always on time. I don’t sweat it if they are a few days late.

  12. Womblebug says:

    The only items that regularly appear on your credit report are loans, including mortgages, car and personal loans, and revolving credit accounts. Not all of these will choose to report current accounts; to my knowledge every single one of these will choose to report delinquent accounts starting at either 30 or 60 days past due.

    Utilities, cell phone bills, medical bills, and other non “credit” accounts are not regularly reported to credit bureaus. Usually the only time these accounts will show is after they have been sold to a third party agency. There are a lot of complicated rules involving who can report credit histories, who can access them, and who can act as a “credit reporting service”, so unless a company’s in the business of issuing credit, they don’t want the hassle of reporting.

    That being said, it’s an immensely stupid idea to choose not to pay a bill because it won’t have a big impact on your credit rating. I can’t count the number of times when I worked for collections for a credit card company we’d get someone who quit paying us months ago call in a huge hurry to pay the bill off so they could get a mortgage approved. They’d also want the history off their bureau… that didn’t happen.

  13. Jon Parker says:

    @MissJ: It depends on what you mean by “pay online.” I pay most of my bills (cable, electricity, cell phone, car insurance, etc.) by going to the vendor site — signing onto for cell phone, for example. All those payments post immediately.

    If you’re using your bank’s bill pay feature however, then this may not be the case.

  14. UpsetPanda says:

    @Jon Parker: I mean by going to the company’s individual website and using their pay online feature. As we all know, websites are not created equal. I didn’t know whether payments showed online immediately or if it took time to process like regular checks do.

  15. Crazytree says:

    @Cowboys_fan: there is no reporting for lates of less than 30 days on any CRA that I am aware of.

    the habitual late payers are the most profitable for the business… you’re paying a premium every month and getting the same service.

  16. yg17 says:

    @Crazytree: FWIW, I was once a couple days late with a credit card payment (I was out of town, completely forgot about it) and there’s absolutely no sign of it whatsoever on my credit report. So the 30 days thing is probably true.

  17. mac-phisto says:

    i don’t know, ben. i refused to pay (the old) at&t wireless an early termination fee when they kept shutting my phone off for no reason (long story). it affected my credit for at least a couple years. then, just when i thought it was going to go away, they sold the debt to a collection agent that also placed an entry on my report.

    i understand your point, but i don’t think fico is being entirely forthcoming in how much a collection item “dings” your score. but they refuse to tell us exactly how it’s calculated, so i guess that’s our only choice, isn’t it?

  18. MercuryPDX says:

    @MissJ: I pay my credit cards online from the credit card’s website. You can usually remit payment up to 24 hours before it’s due for free, some sites ding you a “service charge” for a same day payment which varies from $5 to $10. Payment posts right away.

    If I use the WaMu version of bill pay, the only hassle I save is in physically writing the check and mailing it, they do that part… and payment takes 3-5 days to arrive as if I wrote it out myself. It’s not an electronic transfer; if it was they wouldn’t warn you on the WaMu site that it takes 3-5 days.

    @yg17: The 30 day thing is true. When I reviewed my most recent report where the last of my irresponsible days are dropping off the charts, I only noticed 60/90/120 days past due were reported, not 30’s (and I had a few I can remember that SHOULD be there). That said, they have an icon for “30 days late” in the legend but my guess is they don’t really slam you unless you go beyond that.

  19. killavanilla says:

    They have a right to report it because it speaks to your payment history, which most banks/loan companies are quite interested in.
    Yes, most companies don’t bother to report late pays. However, do try to pay all your bills on time.

  20. Anonymous says:

    Those companies do have the right to put things on your credit report because they *did* extend you credit. You don’t have to pay for your electricity or phone up front, rather, they bill you and give you some time to pay, in other words credit. Instead of advancing you money to give someone else (like a credit card or loan), they just taking care of it themselves.

    I tend to use the vendor’s website. Some are quite fast at taking the money (AT&T has the whole thing done in a couple of hours) some take a couple of days (my gas & electric company for instance) it seems to correlate with the size and tech savvyness of the company. In almost all cases though, it is faster than check since you don’t really have to wait for the mail to get it to them.
    Most also allow you to schedule payment (as someone else mentioned) and in that case it is almost always credited on the scheduled day.

  21. MarkMadsen'sDanceInstructor says:

    I know they may/may not be able to “ruin” your credit score, but why risk it? I would rather just pay with my credit card and talk to my credit card company about doing a chargeback.

    And I never understand people who make late payments on their credit cards because they were “out of town for a week.” Why not pay your credit card once a week, then, even if you are out of town for a week or two, you will never make a late payment. That’s what I do and I’ve never ever missed a single payment, even when I’ve been gone for a couple of weeks.

  22. SirKeats says:

    i’m with the first poster here… regardless of what this article says, if you are reported, it’s going to hurt your score. i spaced on $80 bucks on a card i normally never used (and, thus, spaced on the charge) and got reported by the company (crapital one). i don’t recall what my score was before the ding, but i think it may have dropped me by 10 to 20 points. fortunately i was so high to begin with, im still over 700, but it was annoying as hell anyway. now i have to live with the black-mark for 6 more years.

  23. Anonymous says:

    Being a recent immigrant from a country that’s pretty lax on late payments, I’m glad my household includes an actual American to keep my “credit rating” from getting all F’d up!