How Verizon Could Affect Your Credit Score

While your monthly Verizon bill doesn't typically build credit, missed payments can certainly damage it. Here’s a look at how a simple phone plan can impact your financial standing.

1. Initial Credit Check: When you sign up for a postpaid plan, Verizon runs a hard credit inquiry. This check can cause a small, temporary dip in your credit score, similar to applying for a loan or credit card.
2. Routine Payments: Unlike most lenders, telecom companies like Verizon typically do not report your on-time monthly payments to the three major credit bureaus (Experian, Equifax, and TransUnion). Therefore, a good payment history won't boost your score.
3. Delinquency and Late Fees: If you miss a payment, Verizon will charge late fees and begin internal collection efforts. At this stage, your credit score is not yet affected, but the account is at risk.
4. Account Sent to Collections: If the bill remains unpaid for an extended period, typically 90 to 180 days, Verizon will likely sell the debt to a third-party collection agency to recover the funds.
5. Negative Credit Reporting: Once an account is in collections, the collection agency reports the delinquent debt to the credit bureaus. This creates a negative mark on your credit report that can significantly lower your score for up to seven years.

How Much Will Verizon Affect Your Credit Score?

The exact impact Verizon has on your credit score can vary based on several factors. Here are the key things to consider when evaluating how your account might affect your credit standing.

• Credit Checks. Applying for new service typically triggers a hard inquiry on your credit report. This can cause a small, temporary dip in your score for a short period.
• Payment History. While on-time payments are not always reported, late or missed payments can be. A history of late payments will negatively impact your credit score over time.
• Collections Accounts. If a bill remains unpaid, it may be sent to a collection agency. A collections account on your credit report can cause a significant and lasting drop in your score.

How You Can Avoid Verizon Affecting Your Credit Score

Maintain Consistent Payments

The most straightforward method is to pay your bill on time, every time. Setting up automatic payments or calendar reminders can help ensure you never miss a due date. Consistent, timely payments prevent negative marks from appearing on your report.

Consider a Prepaid Plan

If you're concerned about credit checks, a prepaid plan is an excellent alternative. These plans don't require a long-term contract or a credit inquiry, so they have no direct impact on your credit score. You simply pay for the service upfront each month.

Dispute Any Errors

Regularly review your credit reports. If you find an incorrect late payment or collection account from Verizon, dispute it immediately with the credit bureaus. Correcting inaccuracies is crucial to maintaining a healthy credit profile and preventing undeserved damage to your score.

Ways to Improve Your Credit Score

Your credit score plays a crucial role in your financial life, but it is not set in stone; improving your creditworthiness is always possible with consistent effort. With a few proven methods, most people can see meaningful changes to their score within a few months.

• Monitor your credit reports. Regularly obtain your free reports from the three major bureaus to check for and dispute any inaccuracies that could be hurting your score.
• Make on-time payments. Since payment history is the most significant factor in your score, setting up automatic payments is a simple way to ensure you never miss a due date.
• Lower your credit utilization ratio. Aim to use less than 30% of your available credit, as a lower ratio signals to lenders that you are a responsible borrower.
• Become an authorized user. Being added to the credit card of someone with a strong payment history can help you build credit, as their good habits will be reflected on your report.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as a mix of credit cards (revolving credit) and loans (installment credit).
• Limit hard inquiries. Avoid applying for too much new credit at once, as each application can trigger a hard inquiry that may temporarily lower your score.

The Bottom Line

Verizon may perform a credit check when you sign up, which can cause a temporary dip. Failing to pay your bill can also negatively impact your credit score if reported.

Frequently Asked Questions

Does Verizon run a hard or soft credit check?

Verizon typically performs a hard credit check when you apply for new postpaid service. This inquiry can cause a small, temporary dip in your credit score.

Can a Verizon collection account be removed from my credit report?

Yes, it's possible. You can dispute any errors with the credit bureaus or negotiate a "pay-for-delete" agreement with the collection agency handling the debt.

How long does a late Verizon payment stay on my credit report?

A late payment or an account sent to collections can remain on your credit report for up to seven years from the original delinquency date.