Bad Credit mobile phones

Your credit history is constituted of your payment history. It reveals your past sources of credit and your timeliness in repaying them. Bad credit is the outcome of having high credit utilisation ratio and poor payment pattern. All companies that offer some form of credit do a credit check of their potential customers. This can spell doom when you have bad credit and are looking for a mobile phone because phone companies become reluctant to give you credit considering you a high risk customer. This simply means that the company has little faith in you honouring your contract. However this shouldn’t discourage you. You still have options.

Cheaper phones

This may not be common knowledge but the same company that denies your request for a phone contract on a premium phone can accept your request on a cheaper phone even if you have bad credit. That’s because phone companies view cheap phones as having a lower risk than expensive ones. You will therefore reduce your likelihood of denial if you just choose a cheaper phone. Terms and conditions obviously apply but it’s worth a try.

Security Deposit

However, to be honest, the cheaper devices may not float everyone's boat. That’s why a phone company on having a look at your credit history may request that you pay an upfront deposit first before giving you a phone contract. It should be noted that the measure of deposit you will have to pay will be determined by your credit score. The deposit is a measure of good will and will be refunded at the end of the contract.

Co-signer

If you have the good fortune of having a person who could co-sign your phone contract, that premium phone you are eying may just be in arm’s reach. This is very similar to taking a personal loan when you have a poor credit score. For phone companies which allow for this, in the event that you default on the loan payment, the burden falls on the co-signer. However unlike personal loans, the phone will be considered the co-signer’s until a period of time lapses.

No credit check phone contracts

If you do not want any credit check whatsoever, you could consider no-credit check phone contracts. This is another name for SIM-only phone contracts. With a SIM-only phone contract, the phone company doesn’t consider your previous credit history instead it builds an internal credit history on you. It allows you to prove your creditworthiness to the company and indirectly improves your credit score. The disadvantage of this method would be that you will have to keep your old phone for some time before the mobile company offers you a mobile phone contract. The upside is that you will be considered for a premium device quicker with this method than other methods.

There is always a way out of any rut as you have seen. However, how can you improve your situation? How can you improve your credit score?

Check your credit report

Your credit report contains your payment history. Make sure you check it regularly so that in the case there are any disputes you are able to bring them up with your credit bureau.

Pay your bills on time

Your payment pattern constitutes a very high percentage in the generation of your credit score. Therefore it is important to ensure you stick to every one of your bill payment agreement. Pay not only on time but also stick to the agreement as highlighted in a blog post at PhonesWorld.

Reduce your debt

Start by paying off your credit card which many credit facilities give a higher priority than all other debts. Lowering your debt reduces your credit utilization ratio in turn painting a better image to potential creditors.