January 31, 2023

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You can have a hard time getting a phone contract because of bad credit – but here at Skint Dad, we show you practical ways to help you with your credit rating and identify whether you need a minimum credit score.

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What factors affect your credit score?

There are three main credit reference agencies in the UK: Experian, TransUnion and Equifax. When you approach a credit lender, they will credit check your details against these agencies. All these agencies are authorized and regulated by the Financial Conduct Authority.

What is a mobile phone contract?

When you apply for a mobile phone contract, you are applying for credit. The contract can be for either a SIM-only deal that runs monthly or annually or a contract that pairs you with a new handset.

You can also ask the phone network to lend you a phone (some costing around £1,000) and the assumption that you will pay them back through a phone contract.

To get a mobile phone contract, you must successfully pass a credit check – just like a credit card or personal loan.

Can I get a phone contract with bad credit?

It is possible to get a mobile phone contract with a low score. Having a higher credit score will improve your chances.

Getting rid of old phone? Know what to do with the old mobile phone!

What if I have a bad credit rating?

Most people can still get a mobile phone contract, although you may be limited by the types of phone contracts you can offer.

Few people find that a mobile phone company has rejected them.

How to improve your credit history for mobile phone contracts

There are many things you can do to help improve your credit score and improve your bad credit history.

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This will help you with credit applications in the future and to borrow money or products in the future.

stay on top of your bills

Pay your bills on time and stay on top of your bills and direct debits.

This will show on your credit file that you are not a risk to lenders as you pay them back as agreed.

register to vote

Registering to vote means lenders can verify your identity, and being on the electoral register helps to do so. Even if you don’t plan on voting, simply getting listed can help build your credit history.

It only takes a few minutes to register (and be sure to update it if you’re on the go).

Try not to apply for too many credits at once

When you are looking to get a contract, try to do so within a span of a few months. If you have bad credit and a lot of searches by credit agencies, it can hurt your credit score. Other lenders look at these credit checks, and they can have a negative effect on your credit rating.

When applying for credit, there are two types of searches – a ‘soft’ and a ‘hard’ search.

A ‘soft’ check or search takes an early look at some of the information on your credit report. These ‘soft’ searches will not show up as the stamp you applied for credit. However, it is recorded

The second type of credit check is called a ‘hard’ search. The ‘hard’ search is made when you apply for a loan and more seriously consider applying to get a contract. Other lenders can view these. If there are too many ‘hard’ checks in a short amount of time, it can go against you.

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Check Unused Credit and Store Cards

Lenders are looking for proof that you can be responsible for any credit and that you pay it back on time. This can really help your credit score and your chances of getting the phone on contract.

If you have a credit card, make sure you are up to date on any payments.

If you have unused credit or store cards, you may want to cancel them. Having too many credit options makes lenders think that you may go on a spending spree and not manage to pay off the outstanding amount.

If you have credit, show your lenders that you can pay it back on time. For example, if you have a £4,000 credit card, use up to 25% and show that you make regular payments back. This is known as your credit utilization rate.

By using less credit than you have available, you are proving that you can manage your money.

You may also want to see if the overdraft affects your credit score.

Check Any Old Bank Accounts or Loans

Your credit rating may be affected by an ex-partner. If you had a mortgage or loan with an ex who may have had a poor credit rating, it could affect you as well.

Contact credit reference agencies and let them know that you are no longer together. You need to ask for notice of separation.

get an old handset

Consider buying an older handset or a different model (not everyone needs an iPhone). There are lots of old mobile phones available that all work well.

You can always upgrade later once your credit score improves.

Consider a SIM only contract

Consider a SIM-only deal.

If you already have a handset, mobile phone lenders may agree to a SIM card deal instead. It is considered less risky for the operator than lending high-end handsets. You can check monthly payment option and pay directly from your bank account. Over time this can help improve your chances of reapplying in a few months.

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pay-as-you-go mobile phone

If you really struggle to offer a mobile phone contract because of bad credit, you can consider a pay-as-you-go option.

This way, you can be in complete control of your finances. You won’t need a credit check for this type of payment option, and again, you can always try for a mobile phone contract in a year or two.

What credit score do I need for a phone contract?

Woman in red blazer looking shocked, holding credit card and phone

There is no set score that determines whether or not you can get a mobile phone contract. Your credit score is made up of many factors.

Essentially, credit referencing agencies create credit scores.

A low credit score doesn’t mean you won’t get a contract.

Money management is essential when applying for credit and building your credit score.

When you apply for a phone contract, the lender (02, EE etc.) will do a credit check on you.

They don’t look at or use your credit score, but do look at factors on your report, including how much money you owe other lenders, if you pay back on time, whether you have CCJs and many more. There are factors that they don’t always share.

There are plenty of practical ways to improve your credit history and still manage to get a mobile phone.

If you’re replacing an existing phone, find out how to get the best deal (and keep the same number) when your mobile contract expires.

Naomi Willis

Naomi knows the burden of living on very little and became debt free by following her money saving tips and tricks. He specializes in saving money at supermarkets and side hustle.

Naomi WillisLatest posts by Naomi Willis (view all)

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