Dear Credible Money Coach,
I am making truck payments directly out of my checking account. The company said that they cannot submit to the credit bureau because it will force them to hire more people in that type of transaction role department. How can I get them to report it? This will help me raise my credit score. I have never missed a payment. — Jorge
Hello Jorge, and thanks for your question. Your good payment history certainly deserves recognition, and it can be frustrating to know you’re doing something right and not getting credit for it. The fact that your lender won’t report your positive payment history seems doubly unfair because it’s highly likely they’d find the resources to report it to the credit bureaus if you missed a payment or defaulted on the loan.
But the unfortunate reality is, lenders voluntarily provide consumer credit information to credit-reporting agencies — they’re not required to.
You’re not alone
Your credit score is directly tied to your ability to get credit at favorable rates and terms. And payment history is the factor that accounts for the highest percentage of your credit score calculation. Paying all your bills on time as agreed every month is the single best thing you can do for your credit.
Sadly, consumers pay many types of bills that aren’t reported to credit bureaus as long as they’re in good standing. No law requires creditors to report any information to credit bureaus, and some — like your lender — decline to report for a variety of reasons.
In the past, it’s been a significant problem that has disproportionately affected financially underserved consumers. But the credit bureaus have made some changes to help broaden the range of consumers who can benefit from credit reporting.
You can now sign up to have things like your rental payment history, cellphone carrier payments, streaming service payments and utility bill payments included on your credit report. All that information can help improve your credit score, provided your payment history is good.
Suggestions for your situation
The solution for your challenge may actually be very simple. Instead of making your monthly auto loan payments out of your bank account, pay with a credit card. Your lender may not be willing to report your credit history, but a credit card company definitely will. Be sure to pay your credit card balance on time and in full every month to avoid interest charges and maximize the boost this can give your credit.
If a credit card won’t work for you, another option would be to look into refinancing your auto loan with a different auto lender that you know (and confirm) will report your on-time payments. A credit union might be a good choice if you can find one you qualify to join. Credit unions typically have more flexible credit requirements, and they’re more likely to consider factors other than your credit score when reviewing loan applications. You could also consider taking out a personal loan to pay off your vehicle loan balance.
Even if refinancing actually increases your interest rate, it might be worth it to pay a bit extra in exchange for improving your credit score. A higher credit score can make it easier to get lower interest rates and better loan terms in the future.
Finally, you can reach out to the credit bureaus and ask them to incorporate other types of payments on your credit reports, such as the ones I mentioned above. This could also help lift your score.
Ready to learn more? Check out these articles …
- Why is it important to have good credit?
- Americans’ average credit score hits 13-year high
- FICO score vs. credit score: What’s the difference?
- 3 expert-recommended tips to boost your credit
- What credit score do you need for a mortgage?
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About the author: Dan Roccato is a clinical professor of finance at University of San Diego School of Business, Credible Money Coach personal finance expert, a published author, and entrepreneur. He held leadership roles with Merrill Lynch and Morgan Stanley. He’s a noted expert in personal finance, global securities services and corporate stock options. You can find him on LinkedIn.