The quick answer to this question is yes, your phone contract does affect your credit score. This is because your mobile phone contract is a form of credit.
It's worth knowing that your phone payments can play a role in your wider financial picture. Regular payments on your mobile contract contribute to your credit score, which lenders may consider when you apply for things like loans, credit cards, or mortgages in the future.
If you take out a phone contract, your network provider will cover your spending until the end-of-the-month date of your contract (this date will depend on when in the month you started your plan). They will then bill you for it each month.
Because of this, your network provider will want to be certain that you’ll be able to pay your bill on time and in full each month.
To check how reliable you’ll be at paying bills, they will look at your credit history to gauge what kind of borrower you are.
When the provider checks your records, they will complete a hard search of your credit history. This means they perform a thorough review of your credit report that gets recorded and can temporarily lower your credit score. This will be visible to you and any other lenders you authorise to access your report in the future.
In addition, the provider will report back to credit reference agencies with your payment history, e.g. whether a payment was made as agreed. These payments will be recorded and form part of your credit report.
If you maintain your payments, in full and on time, this will build your score. Like other forms of credit, regularly keeping to agreed payments helps to demonstrate you are a responsible borrower, and so over time, this will assist in boosting your credit rating.
If you have completely missed a payment or paid it late, it will appear negatively on your credit history and may affect your credit score. This can make it harder to borrow in the future because the missed payment could suggest you’re an unreliable borrower. Future lenders will carefully examine your credit history to assess what kind of borrower you are, and so this may affect your chances of being accepted.
Missed payments show on your credit history for up to six years.
Missed or late payments can show on your credit history for up to six years. As well as affecting the outcome of an application, they can also hold you back from some of the more competitive interest rate offers. This is because lenders often save their best deals for applicants with better credit histories.
This said, future lenders will likely consider various aspects of your credit report, so one missed payment won’t ruin everything.
If there’s a missed mobile phone bill showing on your credit history and you think it’s a mistake, you can apply to have this corrected.
You can do this by calling or emailing the credit reference agency that lists the missed payment and explaining the error. They will then investigate your claim by getting in touch with the mobile phone provider and clearing up the dispute. You can also contact your mobile phone provider directly.
If the missed mobile phone payment is down to your own error, unfortunately, there isn’t anything you can do to remove it from your credit history.
The easiest way to prevent missed mobile phone payments is by setting up a monthly Direct Debit. This way, you can sleep easy knowing your bills are taken care of every month without having to lift a finger.
If you set up a Direct Debit, make sure you have enough money in your account to cover your monthly bill. If you don’t, the payment will fail and your credit history may still be affected.
Yes, it is still possible to get a phone contract with a poor credit history. Providers may offer you deals with older handsets, larger upfront costs, or more expensive monthly plans.
If you’re struggling to keep up with monthly payments, you should get in touch with your provider to see if there are alternative payment plans they can put you on.
There are also a number of services available where you can seek free and impartial debt advice. You are not alone!
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Zubin is a personal finance writer with an extensive background in the finance sector, working across management and operational roles. He applies his experience in customer communication to his writing, with the aim of simplifying content to help people better understand their finances.
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