You use your phone for everything.
- Make/Receive calls
- Send/Receive text messages
- Take pictures
- Record videos
- Schedule agendas
- Streaming
- Pay your bills
With all these services carried out by your phone, should your phone bill be considered a utility bill, and why is this important?
Utility companies might report your payment history to the credit bureaus. Your payment history accounts for 35% of your credit score.
Also, during times of unrest, such as the 2020 pandemic, many services were disrupted because they weren’t considered essential. Essential services are commonly associated with utility companies that provide electricity, water, gas, and sewage treatment.
Can you imagine if another disruptive event occurs and you can’t use your phone because it’s not considered a utility service and, therefore, not essential?
What Is a Utility Bill?
A utility bill is a monthly payment summarizing your usage of essential services. Before the end of the month, the service provider will send you an invoice with information that’s usually structured as follows:
1. Customer Information:
- Name
- Address
- Billing Date
- Account Number
2. Usage Details:
- Previous month’s reading
- Current month’s reading
3. Graph of Monthly Usage
4. Service Charges:
- Per unit consumption cost during the current period.
- The basic cost of providing the service to the consumer.
- Public costs: Local government charges for maintenance and safety.
5. Total Amount Due:
- Total cost of service charges
- Taxes
- Other charges
- Due date of payment
The structure and required information of your utility bill will vary depending on the type of service and the provider. For example, your electric bill will show your consumption in kilowatt hours while your water bill will be measured in centum cubic feet (CCF) or gallons.
How to Read Your Utility Bill
Opening the utility bill for the current month can be as exciting as opening your gift on Christmas morning. You know you did everything you could to be on Santa’s “Nice List.” There’s no way you’d find something you won’t like.
If your reaction is more “Shock” than “Awe,” you’ll have to look at the breakdown of service charges. The graph of monthly usage might show consumption is lower. However, variable costs might have increased, such as the per unit cost of producing the service.
For example, gas prices are higher in winter because natural gas costs are higher during the colder months. Thus, even if you took steps to reduce gas usage, the drop in consumption wasn’t enough to offset the increase in the per unit cost of producing gas.
It’s also possible that the provider conducted significant upgrades and repairs to improve service.
Usually, the utility company attaches a letter to the bill informing the consumer of upgrades and maintenance services. Infrastructure upgrade costs are usually passed on to the consumer, and the charge is indicated on your bill.
Does Your Phone Bill Cover an Essential Service?
The definition of a utility bill is pretty straightforward.
When you hear the word “utility,” the following services immediately come to mind:
- Water
- Sewage treatment
- Natural gas
- Recycling
- Electricity
After all, these items are essential for running households, commercial establishments, and industries.
The keyword in the definition of a utility bill is “essential.” Phone services fall under telecommunications.
Are telecommunications considered essential for daily life?
What is an Essential Service?
The Cambridge Dictionary defines essential services as “services that provide basic public needs such as gas, water, and electricity to people’s houses.”
The definition is incomplete because essential services aren’t limited to households. As mentioned above, commercial establishments and industries need access to essential services.
The International Labour Organization (ILO) believes that it’s important to define what an essential service is because it can impact the circumstances of a country.
This sentiment is echoed by the World Economic Forum (WEF).
According to the WEF, the absence of a coordinated definition of essential services disrupted the flow of supply during the COVID-19 pandemic of 2020.
Governments issue directives based on existing laws. These decisions affected the availability of funding for services that aren’t legally defined as essential services.
Is Your Phone Bill an Essential Service and, Therefore, a Utility Bill?
Under the guidance of the ILO, the Committee of the Freedom of Association (CFA), created a basic list of services that countries must consider essential:
- Hospital services
- Electricity
- Water supply
- Police and the Armed Forces
- Firefighting
- Public and private prisons
- Food services to schools
- Cleaning and maintenance services for schools
- Air traffic control
And yes… telephone services: Mobile phone, landline, and Internet service.
In our roundabout way 🙂, we’ve proven why your phone bill IS a utility bill.
Your phone bill summarizes your monthly usage of telecommunication services.
How Does Your Phone Bill Affect Your Credit Score?
Typically, utility companies don’t report customer payments to the three major credit bureaus: Experian, TransUnion, and Equifax.
The same goes for telephone companies.
Telephone companies might not report customer payments to the credit bureaus because you’re paying for services rendered for the month, not for money you borrowed on credit.
However, your phone bill can still affect your credit in the following ways.
- When you subscribe to a phone line, the phone company will run a credit check, which will trigger a hard inquiry that accounts for 10% of your credit score.
- Telephone companies will report unpaid invoices to the credit bureaus.
- If the invoice remains unpaid, the telephone company can delegate the collection to an agency.
💡 Note: Unpaid bills will affect your payment history, which accounts for 35% of your credit score.
How to Use Your Phone Bill to Improve Your Credit Score
If you’ve been consistent at paying your phone bill on time, letting the credit bureaus know about it will give your credit score a boost.
Now that you’re aware that telephone companies might not report your payment activity to the credit bureaus, what can you do?
Use a Third-Party Service Like Cushion AI
Cushion is an app that tracks, organizes, and schedules your bills for payment.
You’re provided a virtual card when you sign up for Cushion’s services. All you have to do is link the virtual card to a bank account. Cushion will issue payment to the service provider once the bill is due.
Cushion manages your payments for monthly subscription services, Buy Now-Pay Later arrangements, and invoices from utility companies.
Think of Cushion as your one-stop Bill Center. The app will do everything for you: track, organize, schedule, remind, pay, and issue a report to Experian, the biggest of the three major credit bureaus.
No need to worry about missing payments. Your diligence and hard work will be recognized and rewarded because Cushion will do it for you!
Use a Credit Card to Pay for Your Phone Bill
Telephone companies might not report your payment to the credit bureaus.
Credit card companies will.
Charge your monthly phone bill to your credit card and ensure that you pay the amount in full every time. If an automatic payment option is available, activate it.
With a credit card, you might earn reward points, cashbacks, and other special offers to pay your phone bill on time.
Related article:
- 4 Best Credit Cards to Pay Bills & Utilities
- How Much is the Average Monthly Phone Bill for One Person?
Summary
Your phone bill is a utility bill because telecommunication services are considered essential for the public’s health and well-being.
If a disruptive event occurs, trust that your government will allocate resources to ensure phone services continue uninterrupted.
Pay your phone bill on time to avoid disconnection and to maintain a healthy credit score. Telephone companies might not report your payment record to the credit bureaus. However, if an invoice remains unpaid, the collection will be passed to an agency that might report it.
