Can You Finance a Phone with Bad Credit?

Why cell phone financing isn't always straightforward

It’s difficult to function in modern society without a cell phone, but getting one with bad credit can be challenging. Most major carriers will run a credit check before approving you for financing. If your credit score is low, you may be denied, but you still need to stay connected, apply for jobs, manage banking, and more. What will you do?

Fortunately, you have options. Cell phone financing isn’t always straightforward, so you might need to think outside the box. This article will walk you through several ways to finance a phone with a low credit score. Here are a few key takeaways:

1. Financing a phone with bad credit is possible: There are multiple cell phone financing options available regardless of your credit score.
2. Credit scores matter, but they aren't the only factor: Many phone providers check your credit, but some offer no-credit-check or soft inquiry options.
3. Prepaid, lease-to-own, and BNPL are viable alternatives: Options like prepaid plans, Snap Finance, and buy now, pay later offer flexibility to those with bad credit.
4. A bigger down payment can boost your approval odds: Paying more upfront may reduce your monthly payments and offset the risk for lenders.
5. Family plans and cosigners can bypass credit checks: Joining a family plan or using a cosigner can help you avoid direct credit checks.
6. Not all financing helps build credit: Only some phone financing plans report to credit bureaus. Ask before signing if you want to use it to build your credit score.

Cell phone financing: What it means and how it works

Financing a phone means you don’t pay the full price for it up front. Users typically make a down payment when they acquire the phone and spread the balance of the purchase price out over time. This is the same type of system used for home loans. With cell phones, the loan terms are normally 12-36 months. Here are the most common financing sources:

• Carrier financing: AT&T Installment Plans, Verizon Device Payment
• Retailer financing: Walmart, Best Buy with Affirm or Klarna
• Lease-to-own programs: Progressive Leasing, Snap Finance
• Buy now, pay later apps: Affirm, Klarna, PayPal Pay in 4

Note that we’re not including prepaid plans or buying a phone outright in this section. With financing, you're borrowing money to purchase the cell phone. That’s why your creditworthiness matters. We’ll explore alternative options later in this article.

Why credit scores matter (but don't always define your options)

Traditional carriers usually run a hard credit check when you apply for financing because your payment history shows how likely you are to pay your monthly bill. Bad credit applicants could be denied or need to make a higher down payment. In extreme cases where credit scores are below a certain threshold, an applicant might need to pay the full price upfront.

Ironically, the hard credit inquiry could lower your credit score by a few points. To avoid that, ask the seller what type of credit check they typically do. A soft inquiry is preferred since it will not affect your credit score. No credit check is even better, particularly if you have bad credit. If you’re concerned, ask about payment alternatives that don’t require a credit check.

Proven ways to finance a cell phone with poor credit

Go prepaid to avoid credit checks entirely

A prepaid plan that includes the device is a good option when financing a phone with poor credit is too difficult. Prepaid plans are available from several carriers, including Metro by T-Mobile, Boost Mobile, and Cricket Wireless. Many of these are available at local convenience stores.

Pay more upfront to reduce financing risk

Cash can solve many problems when credit is unavailable. Most carriers will accept a higher down payment in exchange for approving you for financing. One example is paying 50% of the asking price upfront and financing the remainder.

Join a family plan or get a cosigner

Some carriers won’t approve you even with a high down payment. Another option is to add a new line to someone else’s family plan. You could also ask a close friend or family member to cosign the agreement, but of course, you’ll need to pay your bills on time.

Use store-based or third-party financing

Best Buy, Walmart, and Target sometimes use third-party financing companies that may have more flexible credit requirements. Examples of this are Affirm, Klarna, and PayPal Pay in 4. Financing a phone with poor credit might be easier if you go through one of them.

Lease-to-own programs: Use with caution

Progressive Leasing, Snap Finance, and others offer lease-to-own phone programs that don't require good credit. Unfortunately, the interest rates are high, and APRs can exceed 90% in some cases. This should be reserved as a last option.

Try Snap Finance for no-credit financing

Snap Finance cell phones are popular for people with less-than-perfect credit. They offer 12-month terms and partner with major retailers. The fees can be substantial, but Snap offers a path to get a phone when traditional financing is unavailable.

Use buy now, pay later (BNPL) services

BNPL services are popular with electronics retailers because they provide an additional channel to increase sales. For consumers, BNPL can be approved with a soft credit inquiry rather than the hard credit check that’s done by traditional carriers.

Consider a secured phone credit card (if available)

Some credit card companies offer secured credit cards specifically for phone purchases. Unfortunately, the spending limit on the card is only as high as the deposit you put down to get it. This essentially means you’re paying cash for the entire purchase.

Can financing a phone build credit?

Your monthly payments to a traditional carrier like Verizon or AT&T might be reported to credit bureaus if you’re under contract. BNPL and prepaid services are not typically reported. You could also apply for a bad credit loan if you’re trying to build credit and can’t finance a cell phone. Those payments will almost certainly get reported.

Ask the phone seller if they report to the credit bureaus. They may refer you directly to the carrier or finance company, or they may know the answer to the question. If you’re using alternative financing, ask the same question before you sign the agreement.

Avoid these pitfalls when financing a phone

We’ve already touched on high APRs. Other pitfalls include phones that are locked to a specific carrier, no clear disclosure of total costs or repayment plans, and limited warranty coverage. Always read the fine print and calculate the total amount you'll pay over the life of the financing agreement. You might be better off buying a used device if phone financing options are too expensive. Recycled cell phones can be fairly cheap if you buy them online.

How to improve your phone financing approval odds

Improving your credit score is the most obvious way to get approved for cell phone financing. You could also save for a larger down payment or choose a less expensive, older cell phone. Think carefully about this before you apply for cell phone financing to avoid multiple hard credit inquiries. Too many of those could lower your credit score even more.

Conclusion

Having bad credit doesn't mean you're stuck with a flip phone from 2005. Some carriers don’t require a credit check, or they do soft credit inquiries. Others offer prepaid plans, BNPL, or alternative financing through companies like Snap Finance. Research each option carefully and consider paying cash for a used phone. Your credit situation is temporary, but the right phone plan can help you stay connected while you work to improve your financial health.