If you have a bad credit rating and concerned about your ability to get a pay monthly mobile phone contract, you will be glad to know there are still a number of options available.
Guide To Getting Approved
When you take out a pay monthly contract you are committing to paying a monthly bill, often for a minimum period of time such as 12 or 24 months. Each month you are given services from the network operator such as minutes, texts, and data that you pay for.
This creates a certain amount of risk for the mobile network – especially if they see you as someone with a less than perfect credit rating.
There is always the possibility that you miss a month’s payment or simply default on the agreement because of this they will carry out some form of credit check to assess the likelihood of you staying the course.
It is therefore more difficult to be accepted if you have a bad credit rating, especially during tough economic times when lenders are more reluctant to take a risk.
However, if you play it smart and remain realistic, there are several techniques that will give you much better odds of being approved for a reasonable mobile contract.
The following are some of the ways to get approved.
1). Apply For A Cheaper Handset
It is important to manage your expectations when it comes to getting a mobile phone contract.
Most people are not aware that the model phone they choose for their contract plays a big part as to whether or not they will get approved for it.
While you may be tempted to apply for the latest Apple iPhone or Samsung Galaxy it will be more difficult to get accepted for these as they are the most expensive models.
When you make an application, you are actually credit checked on the handset and monthly tariff value – the more expensive the handset and tariff – the harder it is to be approved. Whether you get approved for these top end handsets will ultimately be determined by your own personal circumstances and credit rating, but opting for a cheaper handset will help.
It’s a misconception that Pay Monthly handsets are given to you for free. Although it’s not explicitly stated, part of their value will be included within your monthly bill, and the remainder is risk that the network takes on. Networks operators need to be extra confident that you’ll be able to pay your monthly line rental, because they’ve provided you an expensive phone without upfront payment.
A brand new phone can cost as much as £600, so networks tend to be cautious when it comes to who they approve for a contract; they typically view people with bad credit as liabilities.
When you fill out an application for a mobile phone contract, the specific model phone you want is taken into consideration. While it may not seem like a very important detail, the fact is that the phone you want matters quite a bit. The more costly the phone you want is, the better your credit must be.
By applying for a cheaper entry level or mid range handset (or even refurbished) you can increase your chances of getting approved. Try to aim for monthly tariffs under £15 for the best chance of success.
Recommended Cheap Deals For Bad Credit
Samsung Galaxy Ace
£7.99 per month
- 75 minutes
- 5000 texts
- 500mb data
Samsung Galaxy Fame
£7.99 per month
- 500 minutes
- Unlimited texts
- 500mb data
£6.62 per month
- 100 minutes
- Unlimited texts
- 100mb data
£8.16 per month
- 100 minutes
- Unlimited texts
- 1GB data
Huawei Ascend Y330
£7.87 per month
- 500 minutes
- Unlimited texts
- 250mb data
2). Apply For A SIM Only Contract
The easiest type of contract for acceptance is the SIM only contract where you use a handset you already own.
SIM only contracts are not viewed as such a big risk to the network operators because no phone is being provided to you. If you don’t pay your monthly line rental, they can simply stop you making calls and do not have to worry about recouping the cost of the usually supplied handset.
Perhaps the best thing about this setup is that you will not be obligated for a 12 or even 24 month period like with other contracts. SIM only operate from a period of only 30 days on a rolling contract and you can keep your existing number too.
SIM only contracts will often make up for the lack of handset with more minutes and texts, so this may even be better for you in the long run. You simply pop the card into your phone and you are ready to go.
Three Mobile offer some of the best and cheapest SIM only contracts on their All You Can Eat plans, giving you a choice of unlimited data, calls and texts.
£20 per month
- All You Can Eat Data
- All You Can Eat Texts
- 600 Minutes
Sticking with a SIM only contract for a while is also a good way to improve your credit rating and demonstrate that you’re capable of upgrading to a handset contract in the future.
If you can show the network that you can meet the terms of a cheaper contract, you are more likely to be able to upgrade to something better at a later date, if you need to.
If you feel your current phone is up to scratch, then you can continue using it with all the perks of pay monthly contract.
3). Get A Mobile Phones On Finance
Pay As You Go mobile phones do not require a credit check and are ideal for people with a poor credit score. The problem is that you need to pay upfront for the phone. This can get expensive if you are looking for a more top of the range model. An alternative to this is getting a mobile phone on finance using a home shopping credit catalogue.
Catalogues such as The Brilliant Gift Shop offer a range of items including mobile phones on finance allowing you to ‘Buy Now Pay Later’ and spread the cost of payments over a number of months.
Pairing a SIM only contract with either a new or old handset is the perfect combination for people with bad credit looking to get connected. However, if you are only interested in a Pay Monthly contract phone, then you will need to think about:
4). Reducing Risk With A Deposit
If you have a poor credit rating and are deemed high risk by the network, you may still be approved if you agree to pay an upfront deposit to offset some of the risk. The amount you will have to pay will vary depending on their assessment, but it will usually be a few months worth of payments.
The good news is that if you can afford this initial sum, you are basically guaranteed approval for the contract. If you are short on funds, you may consider a pay day loan.
You will always get this deposit back in some form, whether through a reduced bill or a lump reimbursement at the end of the minimum term. The specifics of this will vary for each network.
5). Apply With Several Mobile Networks
Making multiple credit applications within a short space of time for credit is considered detrimental to your credit rating as you create the impression to lenders that you’re in desperate need of funds, and, from a lender’s perspective, less likely to be able to pay any further borrowings back on time.
However different mobile network have different standards when it comes to what they consider to be an ideal customer (i.e. your credit rating) and so they each have their own credit checking criteria. This means that whilst you may be declined by one network, you can easily be approved by another. The only way to find out is by applying. This does create a bit of a ‘chicken and egg’ situation, and you will have to determine yourself if this you wish to apply with several networks at the same time.
A quick way of doing this is by applying with a website such as E2Save (owned by The Carphone Warehouse) who have access to a number of different mobile networks. This makes it quicker and more convenient than having to apply to each mobile network directly and definitely is less hassle than visiting several stores on your local high street.
6). Get A No Credit Check Mobile Contract
Since your credit rating will ultimately determine whether you are approved or declined for a contract, the idea of a no credit check mobile phone contract sounds appealing.
The Peoples Operator
You can apply to The People’s Operator with no credit check required on their SIM only contracts. They are the ideal network for customers who can’t pass a credit check for a pay monthly mobile contract with the main UK network operators such as Orange, T Mobile or Vodafone.
The People’s Operator is a relatively new network operator with an aim to raise money for good causes. They describe themselves as the mobile network that gives back and they quite literally do this by donating 25% of their profits to charity. Customers are also given a choice to which charity the money goes to. First launched in November 2012, Jimmy Wales, the co-founder of Wikipedia also joined The People’s Operator earlier this year.
7). Avoid Contracts With Free Gifts
Tariffs that offer a free gift with your mobile phone contract are typically harder to be approved for. You will be credit checked not only on the handset, but also the value of the free gift. Remember, the more expensive the contract, the harder it will be to get approved.
Although it may be tempting to sign a contract in exchange for a new wide screen television or a gaming console, the approval rate for these are very low and require an excellent credit rating to get approved. The contract periods also tend to be much longer and will therefore require a larger commitment on your part.
8). Don’t Be Too Picky!
A thing to remember for those with bad credit who want to get a mobile phone contract, is to not be too picky when it comes to a certain deal. Although you may not be thrilled about having to settle for an older phone or a plan with some limitations on it, you may just have to settle for it until you can get something better. While you build up your credit you will just have to take whatever you can get.
9). Look At A Copy Of Your Credit Report
To get a better understanding of your rating it may be worth checking your credit report through services like Experian.co.uk, who will give you free access for 30 days (as long as you cancel before being billed). First and foremost if you notice any errors on the report, you should immediately try and get them corrected so you’re not unfairly penalised.
If you find that the report you receive has a mistake on it, you can contact the credit bureau and get it corrected for a better overall score. Even if there are not any errors that you can notice, you will still be able to get a better idea as to what your score is like and how much work you need to do to get it back up.
If you are concerned about your financial history (you should be if you have bad credit!) take a long hard look at your credit report in order to look at the details and determine where exactly you stand.
By taking the time to look through your credit report you will be able to get a better idea as to what your chances are like when it comes to getting any form of finance, whether it’s a mobile phone contract, loan, mortgage or credit card.
So, what is the best option for you?
Only you will know what kind of financial situation you’re in. Do you already have lots of credit taken out in the form of multiple cards and loans? Have you defaulted on a number of credit agreements recently? Even if you don’t miss payments, having several cards pushing their maximum balances means you will be less likely to be given any more credit.
If you have a “fair” credit rating you should have no trouble applying for a entry level or mid-range handset contract. However if your score falls in to “poor” or “very poor”, you should think about applying for Sim only contracts to avoid rejection. Over time you will be able to build good faith with the phone network and improve your credit score, so better contracts will become available.
While there’s no sure fire way to be approved a phone contract with bad credit – if you follow the above advice – you’ll stand a better chance than most.
Part of having a bad credit history means having to accept your limitations when it comes to getting finance. All networks required credit checks and have high standards when it comes to who they will approve for a contract phone.
Pick A Tariff Plan You Can Afford To Pay!
Research suggests that the majority of mobile phone users do not use all of the resources they pay for, so think carefully before you jump in and select the most expensive unlimited plan.
Obviously the higher the cost of the handset contract, the less likely you are to be approved. If you can get by on a few hundred texts and not much internet data, then choose a plan that better suits those needs and your budget. Picking a tariff that you can comfortably afford to repay each month is going to boost your credit rating in the long term.
What’s the easiest contract to get?
A SIM only contract is one of your best options because of the fact that it does not involve an actual phone and therefore increases the probability of being approved. Although you might have to settle for using a slightly outdated phone, it will mean that you get on a pay monthly contract and all of the benefits that come along with one.
While it may seem difficult to get a mobile phone contract with bad credit, it is still very possible. The number of options that a person with poor credit has when it comes to getting one of these contracts is limited, but there are still ways to get one.
If you manage to get a contract It is important that you make all of your payments on time so you do not do any unnecessary damage to your credit score in the future.
Although there are no guarantees when it comes to applying for a mobile phone contract, there are some options which offer better chances than others.
It is likely that you will have to deal with some limitations or conditions which are far from ideal, but it is part of what comes with having bad credit.
Take the time to assess your financial situation so you can make the best possible decision on a certain mobile phone contract option. Remember that it is wise for those with bad credit to avoid applying for top end phones, as it will decrease the chances of getting approved.