Gone are the days of using letters and telegrams to contact friends and family. Since the launch of the UK’s very first mobile network in 1985, the use of mobile phones has shifted from a luxury to a necessity for many people in today’s modern world. Whether you send the occasional text message to check up on your parents or spend hours trawling through various social media sites, there is no denying the importance of having a mobile phone equipped with data, call and text message allowances.

What is a mobile phone contract?

A mobile phone contract is an arrangement where you make monthly payments to a mobile network, like Vodafone for example, and they provide a service that allows you to send text messages, make phone calls and access the internet. Over the life of the contract the monthly payments you make will cover the cost of the phone as well as any minutes, texts and data you are contractually able to use for the duration of each month. The more expensive the phone is or the more data you have, the higher the monthly cost becomes.

What is a credit score?

A credit score is a number that is generated based on your credit history. Creditors use this rating system to decide whether a certain financial product is suitable for you and whether they want to lend to you or not. Your credit rating helps each creditor assess the level of risk that would be involved if they were to approve you for a financial product and what the likelihood is of you making any required repayments.

So generally, the higher your credit score, the more likely you are to be approved for a credit product such as a credit card, mortgage and yes, even a mobile phone contract.

You can check your credit score for free online if you’re unsure about your chances of approval for a mobile phone contract.

How does your mobile phone contract affect your credit score?

When taking any form of credit, it’s crucial that you make your repayments on time to maintain a good credit score. Failing to do so can mean late payments and defaults being recorded on your credit file and it’s key to note that even after you have settled these debts, they usually remain on your credit file for up to 6 years before they are removed. People that have found themselves in this unfortunate situation in the past, often later discover just how badly their credit files have been affected when years later, they are refused or have limited access to their choice of credit.

Provided your monthly payments to the network provider are made on time, your credit file will not be negatively affected. In fact, timely repayments on your mobile phone contract may even positively influence your credit score over a period of time, and coupled with customer loyalty, might give you access to better mobile phone contracts in the future.

Can I get a mobile phone without a credit check?

A credit check is a common way for a lender to effectively assess their level of risk when deciding whether to lend to you. Historically speaking, it has always been the case that a credit check is carried out before a form of credit is given and this way of doing things won’t be changing anytime soon.

As can sometimes be the case with other forms of credit, such as financing a car, or getting a short term loan, having a bad credit score won’t completely prevent you from getting a mobile phone contract but it might make it harder. Whilst there is no minimum credit score required to qualify for a mobile contract, having a higher credit score may give you access to higher value handsets and better options for your contract. It’s key to note that each mobile phone network operator will have a different set of criteria which they use in order to assess your level of risk, so just because you have been rejected elsewhere does not mean you won’t be able to get a mobile phone contract with another provider.

It’s a great idea to shop around and look at the offers that are available before applying for a mobile phone contract. Although remember that every credit search that is carried out by a network provider will show up on your credit file and the more credit searches there are within a short period of time, the more difficult it may become to be approved for a contract. Lenders might flag this as it could signal that other lenders have recently declined your application.

What if I can't get a mobile phone contract because of bad credit?

Worrying about having bad credit and confusion about available options can often lead to misunderstandings about phone contracts. Mobile phone contracts are arguably much easier to get approved for when compared to other forms of credit like a mortgage or a car loan. You may however want to consider opting for a less expensive handset as higher value handsets may require a higher credit score.

If you are struggling to get a phone contract because of bad credit, there are other options available to you that may even be more cost effective depending on what you are looking for.

Mobile Phone Contract Alternatives:

Pay as you Go

Mobile phone contracts have become more popular with the release of higher value handsets, however pay as you go is still a popular option, and for good reason.

  • You have complete control over your usage as you can only spend up to the amount you have paid to make calls, send texts and use data.
  • Can work out cheaper because you are only paying for what you need rather than any additional extra allowances you probably won’t use.
  • Pay monthly contracts usually increase by a small percentage each year due to inflation however as a pay as you go customer this won’t affect you.

Sim Only

If you already own a mobile phone handset, a “SIM only” deal could be a cost-effective way of getting connected. This option allows you to buy a SIM card for your existing phone and you only pay the network provider for the minutes, texts and data package, instead of paying off the additional cost of the phone.

  • Usually cheaper than a standard pay monthly contract.
  • Most standard pay monthly contracts last 2 years whereas with a sim only contract you can select different time periods, from a year to a 30 day rolling contract, meaning you can cancel more easily.

For many of us, having a mobile phone has become as necessary as having hot running water and electricity. From keeping in contact with friends and family, to staying up to date on the news, and even running your business, a mobile phone is almost essential these days. While it’s easy to get caught up in the hype for the latest phone, it’s more important to assess your financial circumstances and think about how best to make your options work for you.

Even if you have bad credit, it’s not the end of the world and there are always ways to improve your credit score over a period of time to better your chances of having access to the credit you want or need.