Getting A Mobile Phone Contract With Bad Credit

Bad credit and mobile phone contracts

There can be several outcomes if you’re applying for a mobile phone contract. Your application may be accepted outright, or with a condition (for example, you may be required to pay a deposit) – or you may not get the contract. 

One reason that your application may have been rejected is because of your credit history. When it comes to mobile phone contracts, credit checks are sometimes carried out by the company to help determine if you’re likely to keep up with your payments.

Why was my mobile phone contract turned down?

If you’re turned down for a phone contract, you may not be told why. This can be frustrating. It could be because of factors that appear on your credit report, including:

• Missed payments
  

  If you’ve missed or defaulted on payments, these may suggest to lenders that you’re not financially responsible, or are financially overstretched.

• Bad credit history
  

  Things like County Court Judgments (CCJs), Individual Voluntary Agreements (IVAs) and Bankruptcy Orders appear on credit reports. A CCJ can stay on your report for six years if it’s not paid within 30 days. An IVA remains on a credit report for six years from the date it began and Bankruptcy Orders remain for six years. If any of these appear on your report, they could indicate that you may have trouble making payments on a new mobile phone contract.

• Lack of continuity
  

  If you’re not registered on the electoral register – or if you haven’t stayed in one place for long enough to remain on the register– then lenders may not be able to verify your identity and proof of address. 

• No debit or credit card or bank account
  

  This shows that you may not be able to make the mobile phone contract payments.

Why is my credit bad?

Credit scores can go up or down, based on a variety of factors. Your credit report is one of these. The information on your credit report could potentially suggest that you have poor credit history – for example, if you’ve missed or defaulted on payments, aren’t registered on the electoral roll, have CCJs or IVAs, or have been declared bankrupt.

The way credit scores are calculated varies among credit reference agencies and also lenders, but generally speaking, it gives the provider an indication of how creditworthy you may be. Find out more about what your credit score says about you.

How to improve your credit rating to get a mobile contract

If you didn’t pass a mobile phone credit check, you may want to try to improve your creditworthiness – this is reflected in your credit score. Some key ways to improve your credit score include the following.

• Register on the electoral roll and use the same address when applying for the mobile phone contract.
• Don’t reapply repeatedly – Applications show up as searches on your credit report. Too many could suggest to the provider that you’re desperate for credit. 
• Make full repayments on your other credit agreements on time.

Can I get a no credit check contract?

You will find that some retailers offer mobile phones without credit checks, but only for cheaper handsets. Smartphones – especially pricier ones – will typically be subjected to a credit check. If you spot a deal where you’re not given a credit check before taking on a smartphone contract, tread carefully – it could be a scam.  

What to do if you’ve been refused a phone contract

If you’ve been rejected for a mobile phone contract and need a phone, there are some alternatives that you can explore. They include the following.

• Use an old handset, if you’ve got one.
• Borrow a handset from family or friends.
• Use a pay-as-you-go SIM card. As you’ll be paying in advance and can top up credit when you need to, you won’t undergo a mobile phone credit check.
• Consider a SIM card-only contract where you pay monthly. You’ll still have to go through a credit check, but you might have a better chance of being accepted for this compared to a full phone contract. This is because this kind of contract is shorter and the payment will be lower than for the full contract.

Perhaps you want to start with these alternatives and eventually get a mobile phone contract. If this is the case, you might want to improve your credit score to increase your chances of having your application accepted.

Your Equifax Credit Report & Score – which is free for the first 30 days then £14.95 monthly – shows you your credit history and gives you your score. The score shows how creditworthy a lender may find you.

This article was updated on 23rd March 2022; all information was correct at the time of writing.