3

Person A signed a utility contract (say, electricity).

Person B set up a direct debit to pay for that.

In the UK, whose credit score improves in that situation?

Is there some way to have both persons' credit score improve?

This assuming everything gets paid in time.

  • 3
    I may be wrong but my understanding is that utilities normally only report the credit ratings bodies when people fail to pay. – Peter Green Nov 21 '16 at 14:47
  • @PeterGreen No they report on the state of the account whether paying or non paying. – DumbCoder Nov 21 '16 at 17:21
  • Person B set up a direct debit to pay for that The account holder's because his account is being serviced. The utility knows him(her) as the account holder and not the payee. I may be wrong, but I am not sure. – DumbCoder Nov 21 '16 at 17:23
  • Are Persons A and B married to each other? – Dilip Sarwate Nov 21 '16 at 19:59
  • Sure, it's the account holder. They don't even "know who" paid it - so to speak - it's just money that hits the account. – Fattie Nov 22 '16 at 16:46
3

Short answer: Person A

Here is why. When Person A set up the utility contract they would have been credit checked. The account, and therefore the line of credit, is in their name.

Person B's direct debit is not visible to the credit reference agencies. Their credit status is unaffected (…unless the direct debit is unaffordable and causes Person B's other payments to be missed).

This answer assumes it's a utility contract with quarterly billing, i.e. there's an element of credit (as opposed to a prepay meter).

Is there a way to set this up in order to improve both your credit status at once? Not that I know of, unless your utility company is willing to set up an account in joint names? In my experience to date, they expect an individual bill payer to take responsibility.

Finally. while having a utilities account paid on time is a minor indication of creditworthiness, it's unlikely it would significantly improve your credit profile. The main factors seem to be having a variable line of credit (e.g. AMEX / MasterCard) that you pay in full each time; plus of course factors such as stable address, voter registration, lack of defaults.

  • 1
    Generally (IMX) you can get a utility bill to be addressed to two (or more) people but you need to explicitly ask for this – AakashM Nov 30 '16 at 10:37
  • agreed, it may be possible but is by no means usual. I remember a shared house with 5 people; we were only allowed to have two joint bill payers and this was, as you describe, on special request. – marktristan Nov 30 '16 at 10:47
1

If the utility provider reports the account to a credit reference agency then it will be under the details of the account holder (Person A). Who is making the payments is moot. Some may not report, or only report if the account falls into default. There are also three main agencies and they may not report to all of them.

If the utility provider does report to credit references agencies, you could try adding both names to the account. However, the utility provider might only report under the primary account holder (making no difference to the second holder).

If the provider does report jointly, then both parties would have the (hopefully on-time) payments recorded against their credit histories. However, the credit reference agencies may link the two histories. This means that if one party has an adverse history, it can damage the other party's chances of acceptance for credit due to the link between them. Adding both names also means both parties become jointly and severally liable for the bill, i.e. they can chase either of you for the full amount of any overdue balance (not just half of it).

It should be noted that, in the UK, your "credit score" is not seen by lenders. You have a credit history. Lenders have their own "scoring" criteria which may take into account a variety of information, not just your credit history, and will weight different risk factors differently. Credit reference agents may provide you a score, but this is just a general indication, based on the information they have available and their experience of what many lenders generally look for in that data.

  • +1 for the observation on "credit score" not being seen by lenders – marktristan Dec 5 '16 at 13:59
-7

No one. Utilities do not affect credit

  • Welcome to Money.SE. Please take the tour to see how the site works and what answers are helpful here. Keep in mind, that while we have a large US based membership, it's a big world, nearly 200 countries, each with their own tax code, and method for handling finances, including credit reporting. The question is tagged UK, and it appears from a comment that it is reported. – JoeTaxpayer Nov 29 '16 at 16:20

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .