skip to main content

Can You Finance a Phone with Bad Credit?

Written by
Andrew Tavin, CFEI
Andrew Tavin is a personal finance writer who covered budgeting with expertise in building credit and saving for OppU. His work has been cited by Wikipedia, Crunchbase, and Hacker News, and he is a Certified Financial Education Instructor through the National Financial Educators Council.
Read time: 5 min
Updated on June 10, 2024
woman holding her hands up asking can you finance a phone with bad credit?
Your credit score may impact your cell phone contract, but you do have options.

Remember when a cell phone was considered a 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. Throughout the years, cell phones have become much more advanced with internet access and apps for everything. Presumably, the call quality has improved. However, the robocallers seem to be the ones who make the most phone calls nowadays, so who knows for sure?

Regardless, having a smartphone is now essential, as so much of modern society centers around the capabilities of our mobile devices. So it should be easy to get one, right? Not necessarily, particularly if you have bad credit.

Credit scores and cell phones: How are they related?

Before you enter into a cell phone contract, many providers will perform a credit check. They do this to measure the reliability of an applicant to pay down their debts and manage their credit. In their eyes, if you typically pay your bills on time, you are likely to also pay your phone bill on time.

On the other hand, if you’ve previously run into trouble paying your bills, a provider may think you will also have difficulty paying their invoices.

A low credit score doesn’t necessarily mean that a person is irresponsible, however, 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.

Credit checks and your score

There’s a good chance a credit check with a phone carrier will be a hard credit check. That means it may cause a temporary drop in your credit score. If you are given the option, a soft credit check should not ding your score.

Improving your credit score by paying off debts, paying bills on time, and using credit cards responsibly may allow you to receive better options when it comes to phone plans. However, it can take time to achieve a good credit score, and you probably can’t go that long without a phone. So what are your options?

You can pay more upfront

Your cell phone provider may allow you to pay more upfront when purchasing a new phone. There are pros and cons to this: On one hand, it will require more of your available funds to cover the down payment. However, checking the length of the phone’s warranty may be a good idea, as you don’t want to lose your investment if the phone gets damaged.

On the other hand, since you’ve paid off a larger percentage of the phone, your monthly payments may be lower than a person with better credit who chooses to pay less at checkout.

Paying more upfront when you have bad credit is quite common. It can help you rent an apartment, sign up for utilities, or positively impact the interest rates on your mortgage. With some services, like dental work, you may be able to pay less overall if you pay for everything upfront and in cash.

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

Many companies may offer the option to prepay for your entire phone use. These prepaid plans may lack certain options, like unlimited data or talking time, but they may be cheaper, and therefore, better for your checking account than a standard contract plan.

Shop around

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. Companies like Metro and Boost Mobile specialize in offering phones to lower-income customers, but at the same time, may not offer the same coverage as more mainstream carriers.

Exploring different providers and payment options can help to identify which plan is the most affordable for you, but the big providers may be less likely to offer good deals to people with bad credit.

It’s possible that buying a used phone on the secondary market could lead to a better outcome for your wallet, but you need to be careful you’re not getting scammed.

Consider a cosigner

If the purchase price of a prepaid phone or plan doesn’t work for you, consider reaching out to friends or family. Maybe you are close to someone who trusts you, has good credit, and would be willing to cosign on your account. You can also consider joining a relative’s family plan and paying them back each month, as necessary.

Phones and finances

Fixing your financial situation can feel like a Catch-22: You need a better job to make more money, but you likely need a phone to land a job, and you need more money to buy a phone. Hopefully this advice can help you on your journey to better credit and a better phone plan.

California Residents, view the California Disclosures and Privacy Policy for info on what we collect about you.