How to Finance a Phone with Bad Credit


Bad credit means everything costs more, even cell phones. So what are your options?

Remember when a cell phone was considered a big luxury, rather than a necessity? Back in the day, high-powered businessmen would pay thousands of dollars to carry around a brick that was slightly more effective than two tin cans tied to a string.

Over the years, cell phones have become much more advanced, with internet access and apps for everything. Presumably, the call quality has gotten better, although only robocallers seem to actually make phone calls anymore so who really knows?

Regardless, having a smartphone is practically essential these days, as so much of modern society is oriented around it. But how will your credit score impact your ability to get a phone? Is it possible to get a good deal on a phone contract even if you have bad credit?

Wait, what’s a credit score again?

Before we answer whether your credit score can affect your ability to get a phone, let’s go over what a credit score actually is.

Basically, your credit score is a three-digit number that’s compiled from the credit reports created by the three major credit bureaus: Experian, TransUnion, and Equifax. The most common credit score is the FICO score, which is scored on a scale from 300 to 850.  The closer your score is to 850, the better the loans you’ll be able to get—and with better interest rates too.

If you have a credit score below about 650, then you’re considered to have poor or bad credit. In this range, you won’t be able to qualify for many traditional loans or credit cards. Instead, you’ll have to settle for bad credit loans or no credit check loans, some of which are fine, but many of which come with eye-popping fees and interest rates.

But your credit score isn’t all about loans. It can also be a necessary factor for getting a car or an insurance plan or, yes, a phone and phone plan.

How much will your credit score impact your ability to get a phone?

When you try to enter into a cell phone contract, many providers will perform a credit check.

It makes sense. The reason for a credit score, generally, is to measure how reliable an applicant has been about paying down their debts and managing their credit. If you’ve generally been paying your bills on time, odds are greater that you’ll also pay your phone bill on time.

On the other hand, if you’ve run into trouble paying your bills previously, a provider will likely think that you won’t treat their bills with any greater value and will offer you worse rates—if they’re willing to offer a contract at all.

Obviously, a low credit score doesn’t necessarily mean that a person is irresponsible, but that is often the assumption a lender or service provider will make, at least when it comes to the subject’s likelihood to pay their bills.

Hard credit checks will temporarily lower your score.

Unfortunately, there’s a good chance this credit check will be a hard credit check. That means it’ll cause temporary damage to your credit score. If you are given the option, a soft credit check is always going to be better, but depending who the provider is, it may not be able to be helped.

Improving your credit score by paying off your debts, paying all your bills on time, and using credit cards responsibly, will allow you to get better options when it comes to phone plans.

But it can take time to build up a good credit score, and you probably can’t go that long without a phone. So what are your options?

You can pay more for your phone upfront.

One option you’ll have is to pay more money upfront when purchasing a new phone. Your monthly payments might even be lower than a person with better credit who chooses to pay less upfront.

Paying more upfront when you have bad credit is actually quite common. It can help you rent an apartment and sign up for utilities. With some services, like dental work, you may be able to pay less overall if you’re willing to pay for everything up front and in cash.

Of course, this means you’ll need a larger amount of money saved up, and you’ll want to make sure that the phone you’re getting has a good warranty, as you don’t want to lose that upfront investment if the phone gets damaged.

This won’t always be possible, however. If your credit is low enough, you may not be able to qualify for any financing plan at all. At least not with certain providers.

Many companies will give you the option to prepay for your phone use, but this tends to be more expensive over time than a traditional phone financing plan.

Unfortunately, it’s a recurring reality that the worse your credit, the more you’ll have to pay in the long run. If you do consider a prepayment plan, be sure to shop around at many different providers to see which ones specialize in these kinds of offers.

Shop around for phones and a cosigner.

Obviously, it’s always a good idea to look at different providers to find the one whose plan is the most affordable for you, but the big providers may be less likely to offer good deals to people with worse credit.

Some carriers, like T-Mobile, have started offering plans that don’t require a credit check. As tends to be the case, you may not get the same rates you’d get with good credit, but it’s worth looking into.

You can also consider reaching out to friends or family. If you know someone who trusts you and has good credit, see if they are willing to be a cosigner on the account. You can also look into joining a relative’s family plan and just pay them back each month as necessary.

Fixing your financial situation can feel like a Catch-22: You need a better job to get more money but you need a phone to get that job and you need more money to get a phone. But hopefully, this advice can help you on your journey to better credit and a better phone plan!

If you want to learn more about living with bad credit, check out these related posts and articles from OppLoans:

What are your best tips for buying a phone when you have bad credit? We want to hear from you! You can email us or you can find us on Facebook and Twitter.

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The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.