Most mobile phone providers will perform a credit check when you apply for a contract phone. A low credit score will affect your chances of getting the phone you want or any contract at all.
If you’ve previously been rejected for a contract, or fear you might be, there are some things you can do to increase your chances of acceptance. Some are immediate fixes while others require a longer-term commitment and a bit of work. Either way, you will soon be confidently applying for a contract phone. Here’s what you need to know…
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Network credit checks
Credit checks are performed by mobile phone providers because you technically buy now and pay later for contract phones. The monthly fee you pay covers your data, calls and minutes and also a little towards the cost of the device. How much you pay towards it each month depends on the retail cost of the phone and the length of the contract. The phone is not fully paid for until your contract has ended.
This is risky for the network, especially since smartphones now cost hundreds of pounds. Networks need to know that they will get their money back. A credit check is the best way to determine someone’s financial trustworthiness. If you have little outstanding debt and always make payments on time, you’re considered a good risk and will be accepted. If you have a huge number of credit cards, only ever make the minimum payments or often miss payments, you are likely to be rejected.
If you have no idea of your own credit score you can now check for free with companies like Experian and Equifax. This will give you a good idea of your likelihood of being accepted.
Improve your chances by improving your credit score
The best chance for acceptance is a strong credit score. If you’ve checked yours and it’s not looking too hot, there are lots of things you can do to strengthen it. This isn’t an overnight fix, it may even take months, but improving your credit score will help you with more than just securing a mobile phone contract. Credit checks are performed when you apply for loans, credit cards, overdrafts, buying goods on finance, mortgages and more. So a strong credit rating is practically essential.
Some of the ways you can improve your credit score include:
- Registering on the electoral roll (and re-registering if you move).
- Paying your bills in full and on time.
- Paying off debt and keep credit card or overdraft balances low.
- Don’t apply for too much credit. Repeated applications negatively impact your score.
- Carefully check your credit report and correcting any inaccurate information.
Choose a cheaper handset
You don’t have to be without a phone while you wait for your credit score to improve. You may even be able to get a contract phone. Choosing a cheaper handset will help improve your chances of acceptance because lower monthly payments present less risk to the network.
Forget about the latest iPhone or Samsung. They cost well over £1,000 and only a very good credit rating will score (pun intended) you one of these. Opting for a cheaper handset will enable you to get what you need, whilst buying some time to rebuild your credit score. And a contract phone can help you do that if you pay all your bills on time.
If you’re not convinced you’ll be accepted even for a cheap handset, you may want to look into companies that offer ‘no credit check’ contracts. The devices they offer are usually on the cheaper end of the market. You may also pay more per month for the package than with a traditional retailer. However, it maybe your best option if you desperately need a new phone. There are numerous companies offering such deals and you can even compare bad credit contracts at uSwitch and Compare my Mobile.
Buy a phone upfront and choose SIM-only
If you’ve got your eye on a top handset and no alternative will do, you have one last option. Buy it outright and choose a SIM-only deal.
SIM-only is brilliant because you can snag a great bundle of minutes, text and data for a very low monthly cost. With 30-day rolling contracts and a whole host of other benefits, SIM-only is becoming a really popular choice with people who want flexibility.
Even better, the acceptance rate for SIM-only contracts is suggested to be around 99%. This means you’re extremely likely to get the deal you want, from the provider you want even with a poor credit score. If you opt for a SIM-only contract, you can also use it help strengthen your score by paying your bills on time.
If you’d rather avoid undergoing a credit check – perhaps because you’ve recently applied for a few different things – there are SIM-only deals with no credit check. GiffGaff and Smarty are just two operators who have plenty of credit-check free options. However, it’s important to note these won’t help you rebuild your credit score.
