Can you get a mobile phone contract with poor credit?

From the credit check and missed payments to rejections and alternative options, we’ve taken a 360 look at taking out a mobile phone contract with poor credit.

The short and sweet answer to this question is yes.

Having a poor credit history doesn’t mean you’re not eligible to take out a mobile phone contract. What it does mean, however, as with any other type of credit (like a loan, credit card or overdraft, for example), is that you may be less likely to be given the contract in the first place.

How does a phone network decide whether to give you a contract?

Taking out a mobile phone contract is essentially a type of credit. You’re getting the handset itself and the minutes, texts and data (or whatever the package entails) now, and paying for it at a later date. 

Because of this, and fairly so, most network providers will run a hard credit check. They will use the information they gather from that to assess two key elements before offering a phone contract:

1. Your identity and that you are over 18 years old. Ideally, you will be on the electoral roll, so if you’ve not signed up do so.
2. How you’ve managed money in the past. No network provider wants to soak up resources chasing customers for money, so if you’ve got a track record of missed or late payments, this could raise alarm bells.

If the mobile phone contract you’re after is the first type of credit you’ve taken out, you may find your non-existent credit history could hold you back too. This is because network providers will have no information to go off to suggest you are or aren’t a responsible borrower.

Mobile phone contracts for people with poor credit

Even if you have poor credit mobile phone contracts are still available, as there are companies out there who specialise in phone contracts specifically for people with bad credit. You can find them on the internet or by asking a sales advisor in a mobile phone store.

However, if you’re considering this option, bear in mind the phone’s usually an older model and your monthly payments will probably be significantly higher.

The good news is this can help you improve your credit score if you pay your bills on time - read our guide on everything you need to know about credit scores.

Rejected for a phone contract, what now?

If you’re rejected for the mobile phone contract you had your eye on, all hope’s not lost. Your first back-up option might be to apply for a contract for an older model of the same or different handset. Because earlier versions aren’t as pricey, there’s less risk involved for the network provider, which might mean they’re more likely to accept your application.

Certain networks may also ask you to pay an upfront deposit to start a contract, which can offset their risk. If either of these doesn’t suit, there are other alternative options.

Utilise someone else on your contract via family plans or co-signers

There are two options where you can use someone with a good credit rating to sign up to a contract. The first is family deals, where up to 10 lines can be connected to one single contract. As only one person (the main payer) is responsible for the contract, only they will need to take out a credit check.

This can be cheaper overall as you can get cheaper deals when buying multiple offerings. The negatives are that one person will be liable for all the bills, and it has no positive impact on your credit rating (although you can follow other ways to improve your credit score).

You can also ask someone to be a co-signer, which is similar to being a guarantor. This essentially asks someone else to be liable for your payments, which will offset the risk for the network provider offering you the contract. This method will improve your credit score as long as you make your payments on time, and it’s possible to switch through your contract as well for you to be solely responsible once your credit score has improved.

SIM only and PAYG deals

Alternatively, providing you have an old handset you can make use of (or can buy or borrow one), another option could be to look into a SIM-only contract. As with older handsets, only taking out the SIM means less financial risk and could increase your odds of being accepted.

There are also pay-as-you-go packages. Credit checks aren’t needed full stop for these kinds of deals, meaning your poor credit history can’t hold you back, and there are a few advantages about these deals as well if you don’t plan to use your phone that often.

Avoid multiple applications for phone contracts

Don’t make the mistake of applying for lots of mobile phone contracts if you’re not accepted right away. As with any type of credit application, each will appear on your credit report and a string of requests can make you look desperate to future network providers - and lenders in general, for that matter.

As a result, you’ll be shooting yourself in the foot. Essentially, the more applications you make, the less likely network providers are to say ‘yes’.

Do you really need the contract right now?

If your mobile phone contract requests are being rejected because of a poor credit history, the first question to ask yourself is, do you really need it? Taking on any type of credit is a big financial commitment, and one that should only be considered if a) you’re 100% confident you can afford it, and b) you absolutely need it.

There are a number of things that can lead to a poor credit history, like:

• Missed or late payments
• Joint finances with someone who has bad credit
• Not being on the electoral roll
• County Court Judgements (CCJs) against your name, to name just a few.

If it can wait, putting your phone contract on the back burner and working on improving your credit history in the interim might be the more sensible option.