When you move into a house or an apartment, you may have to pay for utility services like gas, electricity or water. To get these services, companies often look at your credit history – including your record of paying for utilities at any previous residences. Paying your utility bills on time is important. If you're strapped for money, there are ways to control your bill and handle tough situations to keep your utilities on.
What You Should Know About Getting Utility Services
Unless you are moving into a home where someone else is paying your water, electric or gas bill, (for example, an apartment where "utilities are included"), you need to apply for these services. You can apply on the phone, online, or in person. Applying for utility services is applying for credit.
Like other creditors, utility companies ask for information like your Social Security number so they can check your credit history — particularly your utility payment history. A good credit history makes it easier for you to get services. A poor credit history can make it more difficult.
And because your utility payment history becomes part of your overall credit history, it can affect whether you can get other types of credit.
Paying a Deposit
If you are a new utility customer or if you have a poor payment history, the utility company may require you to pay a deposit or get a letter from someone who agrees to pay your bill if you don’t. This is called a letter of guarantee.
The company’s policy for requiring deposits or letters of guarantee must be the same for all customers. If you are a new customer, the company can ask you for a deposit or letter of guarantee only if their policy is to ask all new customers to provide it.
What If Your Spouse Has a Lousy Payment History?
Generally, a utility company cannot require you to pay a deposit because previous utility services were in your spouse's name but not in yours. However, your spouse's utility credit history may be a factor if:
- your spouse will use the services or will be liable for paying for the account
- you are relying on your spouse's income to help pay the account
- you live in a community property state — even if you weren't living together and didn't share the account while it was open
Under the Equal Credit Opportunity Act (ECOA), you have the chance to get utility services in your name by proving that:
- you did not live with your spouse when the account was overdue
- you never saw the bills
- you paid the bills once you discovered they were overdue
If you can't prove any of the above, the company may ask you to pay your spouse's old debts, pay a deposit, or provide a letter of guarantee before your service is connected. In this case, the company's right to take such action is governed by state law, not the ECOA. Contact your state consumer protection office for more information.
What If You're Denied Utility Service?
You have the right to know why the utility company denied you service, required you to pay a deposit, or asked you to provide a letter of guarantee (if you refused to accept those terms). Within 30 days of its decision, the company must send you notice stating the specific reasons or advising you of your right to get those reasons. You must submit your request in writing within 60 days of the company’s decision on your application.
How You Can Lower Your Utility Bills
The U.S. Department of Energy estimates that over half your energy bill comes from heating or cooling your home — particularly during severe temperature months. But you can save money year-round. Here’s how:
- Many utility companies offer tips to customers for conserving electricity, water, and gas. Usually, they're on the company's website or in their bill inserts or brochures.
- Find out if your utility company offers a budget billing plan. This plan allows you to pay a flat fee each month for services and can help you budget your monthly expenses. However, these plans typically require you to eventually pay any amount you've incurred above your flat monthly fee. An important consideration: Your ability to keep your use to a minimum to help prevent getting a really high bill later.
- Consider doing an energy audit. An audit involves finding out where you’re wasting energy and how well your heating and cooling systems work. The Department of Energy offers a do-it-yourself energy audit tool to help you do this.
- Your state consumer protection agency also may offer tips for conserving energy. Visit the website or call the number for the agency in your state.
If You Have Problems Paying Your Utility Bills
Your essential expenses — like rent or mortgage and utilities — should be top-of-mind as you work out a budget to manage your money efficiently.
If you are behind in your utility payments, contact the utility company immediately to see if they can work out a payment arrangement with you until you can be current on your bill. Often, companies are willing to keep your services on if you pay a portion of the overdue bill and catch up your payments. If you make payment arrangements, keep in mind:
- The company may require you to pay your future bills on time and in full while paying off your past due balance. Consider your ability to keep the arrangement for the old bill without falling behind on future bills.
- Failing to make payments as agreed could result in your services being disconnected and the company not honoring future arrangements, should you need to make them again. Once you agree to an arrangement, do your best to stick to it.
- Although payment arrangements often allow you to keep your services, your payments still are late since you're not paying the full amount by the due date. Find out the company's policy for reporting late payments to credit bureaus when a payment arrangement is in place. This way, you can consider any impact on your credit history.