Having a mobile phone is a necessity for most of us these days. But if you've got bad credit, then you might be struggling to sign a mobile contract that includes a new phone. Is it possible to get a contract phone even if you have bad credit? Sure, but there are some things that you should know first!
Why Does Bad Credit Make Things Difficult
Basically, if you have bad credit then your credit report makes companies think that you're not a good financial risk. Maybe you've had problems repaying debts or making payments on your mortgage, maybe you have a lot of debt. Companies want to know that they stand a good chance of getting their money back if they lend to you, and a bad credit report makes them less likely to lend.
Why does this affect your mobile phone? Because a contract phone isn't free. Sure, you might get a phone for no money up front. But the actual cost of the phone is added in to the price of your monthly contract. Essentially, this means that the operator is giving you the phone and then you're paying in monthly instalments. A bad credit report makes the operator think that you're not going to pay those monthly instalments.
Bad Credit Contract Phones
That's not to say that operators won't offer you a contract phone at all, many will. However, if you're signing up for a “no credit check” or “bad credit” contract that includes a phone, there are some things that you should keep in mind.
Firstly, you're unlikely to get a top end phone. Flagship phones are expensive, so a bad credit contract phone is likely to be an older model, and in some cases won't be a smartphone at all. Secondly, you are likely to pay more per month than if you signed up for the same service with the same phone but underwent a credit check. This might seem unfair or counter intuitive, but because you're higher risk, operators will charge you more.
That being said, there are plenty of options for contract phones on no credit report or bad credit report contracts. You're more likely to find options with secondary operators (Lycamobile, for example) than with the four major UK networks (O2, Vodafone, Three, EE). But there are definitely options out there!
Improving Your Contract Options
If you take a look at your contract phone options and you're not finding something that fits your needs, there are things that you can do to improve those options:
- Down Payments: if you want a better phone than you find on offer then you are likely to get a more modern, more expensive phone if you can pay a down payment to the operator first. Paying even £100 or so up front for the phone (and having the rest of the cost attached to your monthly bill) can make a big difference to the kind of contract phone you'll get.
- Credit Improvements: rather obviously, improving your credit score will improve your chances of both getting a contract phone and getting a better contract phone. Depending on your situation, improving your credit might not be very difficult and could take just a few months, so it could be worth waiting on that phone contract until your financial situation is looking better.
- Going SIM Only: taking the phone completely out of the equation and signing up with an operator for a SIM only phone plan means you're going to get better and cheaper options for service. Okay, you don't actually get a contract phone, but you might find that buying that phone second hand on eBay or Craigslist ends up being a better option for you.
Getting That Contract
There are also a couple of simple things that you can do to improve your chances of getting that contract and phone in general. Make sure that you're signed up to the electoral roll and that you apply for your contract using the same address as is on the electoral roll. Also, make sure that you have a proper bank account when applying. Both these things improve your credit rating, and therefore improve your chances of getting the phone and contract you want.
Finally, if you end up not being able to get a contract and contract phone, then you're going to need to take a step back and wait. Constantly applying for contracts and getting denied makes your credit situation look even worse. Simply waiting a couple of months and trying again (whilst paying all your bills on time in the meantime) should improve matters.
Getting a contract phone is possible, even if you do have bad credit, as long as you don't have your expectations set too high. However, you might want to take the time to improve your credit situation first in order to get a better and cheaper contract than you otherwise might be approved for.