Does Netflix Affect Your Credit Score?

How Netflix Could Impact Your Credit Score

While your monthly Netflix payment doesn't directly help your credit, an unpaid bill can. If left unresolved, that small subscription fee could eventually be reported to credit bureaus, damaging your score.

1. Initial Missed Payment: The process begins when a payment fails, often due to an expired credit card or insufficient funds. Netflix will notify you of the payment issue.
2. Service Cancellation: After several failed attempts to charge your payment method, Netflix will suspend your service. However, the outstanding balance for the unpaid period remains a debt you owe.
3. Internal Collection Efforts: Before taking further action, Netflix will typically try to collect the debt internally, sending reminders and requests for you to update your payment details and settle the balance.
4. Debt Sold to a Collection Agency: If you don't pay after a prolonged period, Netflix may sell your debt to a third-party collection agency. This is a standard practice for recovering unpaid consumer debts.
5. Negative Credit Report Entry: Once the collection agency owns the debt, they can report the unpaid account to the major credit bureaus. This collection account can stay on your report for years, significantly lowering your credit score.

How Much Will Netflix Affect Your Credit Score?

While a Netflix subscription doesn't directly report to the major credit bureaus, there are indirect ways it can influence your credit. Here are the key factors to consider.

• Direct Impact: Netflix does not report your payment history to credit bureaus like Experian, Equifax, or TransUnion. Therefore, a late or missed payment will not directly lower your score through standard reporting.
• Payment Method: The credit card used for your subscription is what affects your credit. A missed payment on that credit card, which includes your Netflix charge, will be reported and can harm your score.
• Collections Accounts: If an unpaid Netflix balance is sent to a collection agency, that agency can report the debt. This new collections account on your credit report would have a negative impact.

How You Can Avoid Netflix Affecting Your Credit Score

Use a Credit Card for Payments

Opting to pay for Netflix with a credit card can be a strategic choice. This method ensures your subscription is paid on time, even with a low bank balance, sidestepping any missed payments that could potentially be sent to a collections agency and reported.

Set Up Payment Reminders

To prevent accidental missed payments, consider setting up alerts for your Netflix billing date. Using a calendar app or budgeting tool can serve as a helpful reminder to ensure your payment method is current and that you have sufficient funds available in your account.

Utilize Prepaid Options

Using a prepaid card or a Netflix gift card is a surefire way to stay ahead. By paying for the service in advance, you remove the possibility of a missed payment, protecting your account and preventing any chance of it being sent to collections.

Ways to Improve Your Credit Score

Improving your credit score is entirely possible with consistent, positive financial habits. By following some proven methods, most people can see meaningful changes to their score within three to six months.

• Monitor your credit reports. Regularly obtain your free reports from all three major bureaus to check for inaccuracies, dispute errors, and track your progress.
• Set up automatic payments. Your payment history is the single biggest factor in your score, so ensure you never miss a due date by automating your bill payments.
• Lower your credit utilization. Aim to keep your credit utilization ratio below 30% by paying down balances or requesting a credit limit increase on your existing cards.
• Become an authorized user. You can be added to the credit card account of someone with a strong payment history, which can help boost your own score.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards, installment loans, and mortgages.
• Limit new credit applications. Applying for too many accounts in a short time can result in multiple hard inquiries, so use prequalification tools and space out your applications.

The Bottom Line

In short, your Netflix subscription won't directly impact your credit score. However, the payment method you use for the service could have an indirect effect on your credit history.

Frequently Asked Questions

Can using a credit card for Netflix help build my credit?

Yes. Consistently paying your Netflix bill on time with a credit card can positively impact your credit score, as timely payments are reported by your card issuer.

What happens if I miss a Netflix payment?

Netflix will not report a missed payment to credit bureaus. However, your service will likely be suspended until you settle the outstanding balance on your account.

Can an unpaid Netflix bill go to collections?

While rare, an unpaid bill could be sold to a collection agency. If this happens, the agency can report it, which would negatively affect your credit score.