Has a carrier rejected your application for a phone plan because of your bad credit history or missed payments? Do they seek large deposits for advanced smartphones because your credit cards are getting maxed out? Don’t let them deceive you into financing unfavorable contacts that’ll only doom your budget. It’s high time you learn your rights and obligations arising from most cell phone contracts.
In short, bad credit should not prevent you from getting the cell phone plans you want. However, certain network providers prefer good credit holders over bad ones, which may reduce your eligibility. More precisely, you may have to adjust some of your initial hopes and expectations from the phone offers that are available.
Think carefully about improving your credit score before applying for a phone contact if you’re not in a rush. Or avoid behavior that gradually lowers your rating and leaves a harmful footprint on your credit report. Alternatively, satisfy yourself with a less expensive device, opt for a prepaid plan, or join a family plan.
Can You Get a Phone Contract With Bad Credit?
We understand that suffering from bad credit or having no history at all is a common issue today. In fact, a few years ago, 50% of T-Mobile customers didn’t qualify for top promotions. That’s why we are here to arm you with accurate information necessary to get the best possible phone deals. More precisely, four ways can get you approved for a phone plan with poor credit.
Contact a Prepaid Carrier.
Prepaid network providers don’t impose a credit check for their offers. Indeed, they don’t run the risk of you not settling your debt since you’re paying upfront. All four carriers will offer you a prepaid plan, which tends to be less costly than most postpaid counterparts. Even better, there are providers such as Boost Mobile that offer only prepaid services. Their plans are relatively cheap and require no credit check nor lengthy contracts. On the plus side, such companies use the same network as major providers, so you get the same quality for less.
Find a Co-Signer
As with personal loans, anyone with good credit may co-sign and guarantee on your behalf. However, the products appear in the name of your co-signer, who can later transfer the report to your name. Carriers won’t ask for credit scores as the account is already open, but some aspects may differ depending on the provider. We suggest you consider this alternative if your credit card financing status is close to the spending limit.
Join a Family Plan
When one family member has good or excellent credit, you can join the same financial services without having your credit report checked. Family plans may contain up to 10 lines per plan, with only one credit score checked. Still, ensure you execute regular monthly payments as the service plan holder is ultimately responsible for any missed payments. A new family plan line with Sprint will cost you far less than a single line on an unlimited plan.
Go With a Security Deposit.
Leaving a deposit with any mobile carrier will grant you the opportunity to get a cell phone plan. This way, bad credit scores don’t impact endeavors to conclude a phone contract. Different providers will ask you to pay up to several hundred dollars. A disciplined client usually receives compensation once he starts making on-time payments. Sometimes this time may extend up to 12 months depending on the offer.
How Do Phone Network Providers Decide Whether to Give You a Contract?
Signing a cell phone contract is another form of credit that you must repay over a specified time. Providers give you the handset, plus a package of data, minutes, and texts, and you pay for that on a later date. To make sure you pay on time, network companies have rights reserved to run a hard credit check. Also, note that phone sets are property of their respective carrier until you repay them in full.
Once they gather all necessary information, cell phone and package companies assess two key aspects. The first involves your age and identity and whether you’re on the electoral roll. The second refers to how you’ve managed money before, an in-depth analysis of credit scores, and your history of monthly payments. Even a non-existent credit history may hold you back as network providers have no information about what kind of borrower you are.
Above all, no mobile carrier would chase customers for due money. If they believe you’re a risk for them, they’ll undoubtedly seek additional security in the form of deposits. Alternatively, you may get requested to provide a co-signer or another backup data.
What Should Your Credit Score Be to Get a Phone Contract?
For credit scores below 660, getting a phone contract without much fuss may be challenging. SIM card issuers run thorough checks on scores before approving a phone contract to any client. Hence, it may be better to use an alternative offer, such as a prepaid plan or a security deposit.
Conversely, any score in the range of good and above will grant you access to many convenient phone offers and free stuff. Customers with tier 1 credit raking are even eligible for exclusive deals. To keep it that way, make timely payments and maintain your credit reports neatly. Of course, you would like your positive financial endeavors to get reported to a credit bureau.
Finally, ask yourself whether you can make it without a cell phone contract right now. If you have financing issues, it may be better to wait for more favorable offers. Go with a network carrier such as Sprint if you are 100% sure that you can afford it, and you urgently need it.
Do You Need Good Credit to Get a Cell Phone Plan?
The higher your credit score, the more likely you’ll get approved for any phone package you plan to purchase. The approval also depends on the provider you select and your preferences. To make sure your rejection chances are close to zero, do your homework and learn the essential information first.
Overall, you have two paths to follow at disposal to limit phone providers’ refusal. Meaning, you can either avoid harming your score or take steps to boost it. Here are specific bad habits that damage most credit scores without applicants even noticing:
Excessive Credit Utilization Rate
The lower your balances as opposed to the entire available credit, the better your report. You may not know that maxing out a credit card may decrease your score by as much as 45 points. Hence, please don’t close your card accounts to rein the credit utilization ratio, but keep them open. Credit card accounts are proof of your credit history and stretch your credit utilization range.
Multiple Credit Card Applications
Applying for a range of credit cards within a short timeframe will lose you significant FICO points. Stacked applications urge cell phone providers to think that you’re desperate for credit. Above all, when applying, lenders pull a credit report for review, which means a hard inquiry on your behalf.
Note that any hard inquiry will cost you about five points and stay on credit reports for up to 24 months. Alternatively, not having a credit card will doom your score. You must have it open for at least six months to get your information reported to at least one credit bureau.
Missed Payments and Defaulted Loans
Poor payment history can cost you around 100 points and prove incredibly harmful for your credit score. Note that any late payment for over 60 days gets reported to at least one credit bureau, including Equifax, Experian, and TransUnion.
Any information on missed monthly payments may stay on your credit report for seven years. Pay utmost attention to the data on credit reports and act accordingly. Getting automatic payments is a smart way to keep up with financing bills and other monthly expenses.
Negative Account Information
Specific information that shows on credit reports may damage credit scores for many years to come. First, stay away from bankruptcy as such financial failures can cost you up to 240 points. Even worse, one bankruptcy case remains on your credit reports for almost ten years.
Foreclosure is another score-killing item that will show up on your credit report for seven years and deprive you of 160 points. Furthermore, charge-offs can take over 100 points off most high credit scores.
Is a Credit Score of 611 Good?
Suppose your credit score stands at 611, which places you within the category of the fair FICO® range. In short, your rating is below the average score United States citizens hold. The downside of fair credit is that many providers refuse to work with such clients fearing possible missed payments.
Therefore, it’s essential to identify ways to improve your credit score and avoid damaging it even further. First, set automatic payments from your bank account for whatever bills you have coming in. On-time payments will significantly improve your payment history and report and raise your credit score.
Then, focus on reducing your credit utilization ratio and financing options. The more credit offers you use, the lower your score will go. Thus, stay away from maxing out your credit card accounts, which means no more than 30% of the set limits. Moreover, pay attention to your total credit card debt and credit accounts. You may want to check your credit and mix of installment loans, such as mortgages, car loans, and revolving credit.
Another way to enhance your credit standing is to make use of frugal-living strategies. Learn how to live, travel, and cook in a simple and yet healthy way. Try to find a side job or work overtime to decrease your debt level and steer away from applying for new loan products. Last, consider quitting different unnecessary subscriptions and focus on free skill-building courses online.
Several factors, such as marital status, age, donations, employment history, and income amount, don’t impact credit scores. Remember that the final score you get from the three major reporting bureaus Experian, Equifax, and TransUnion gets combined. Meaning, your final FICO score is a combination of three different assessments of your credit history.
Further Tips to Ensure You Get Accepted
We want to help all our readers use the benefits of monthly payment phones. Hence, we listed some valuable tips that can help you strike the best possible cell phone deals. Apply the ideas below if you believe your credit history is a bit scrappy.
- Consider choosing a less expensive mobile device and reasonable data service offers. The heftier the new phone set you want is, the higher the odds for refusal. Advanced Samsung and iPhone products appear quite difficult to get approved for. It’s best to focus on cheaper variants to boost your chances of concluding a phone contract.
- Refrain from reapplying. If you got refused for a particular cell phone contact once, stay away from applying again. Each application shows in your credit report and can further harm not-so-perfect credit scores. It’s best to consider some of the alternative courses of action.
- Maintain a valid bank account. Not having a bank account with a credit or debit card will most likely count against you. Meaning, your application for a cell phone contract can quickly get rejected. So, ensure you hold and use an active bank account before applying.
- Focus on continuity. Network companies will consider you a risky client if you’re changing your current address too often. Also, changing jobs frequently can give the impression that you won’t execute payments and pay your phone bill on time. Therefore, it’s essential to be employed and lead a stable life.
Taking care of your credit score means that, most likely, you won’t pay a dollar upfront even for the latest smartphone. However, just like for any other loan, bad credit scores eventually lead to being rejected for a cell phone contract. Hence, it’s essential to polish your credit card debts before you consider a phone service contract.
We also urge you to compare the requirements and rates of different mobile providers before applying. If you believe your chances of approval are minimal, don’t even bother making hard inquiries. Go with a prepaid plan or purchase a less expensive cell phone. Alternatively, you can go with a security deposit or be part of your family phone plan.
Whatever final verdict you’re getting at, make sure you explore all the alternatives you have at your fingertips. Also, check out the following article, needs vs. wants and how to distinguish them, and set your priorities straight.