How to Get Approved for a Cell Phone with Bad Credit?

How to Get Approved for a Cell Phone with Bad Credit?


10 Min Read

Having bad credit can make your life difficult, even if you are not going to be indebted. For example, it may become a reason to reject you for home rent or a barrier to finding a job related to finance. However, there’s another less obvious one among all the consequences.

Having a bad credit rating can force you to pay more for your cell phone service or even become an obstacle if you want to get a new smartphone. But is it possible to qualify for phone financing with poor credit? The short answer is yes! Let’s find out how to get approved for a cell phone with bad credit, paying no activation fee, and no deposit.

What Is a Cell Phone Plan?

Nowadays, people tend to use mobile phones more than laptops or PCs. Although it is mostly used for organizing and communicating, sometimes a smartphone is more than just a means of communication. It may also show your status or provide you with helpful health apps or the ability of making mobile payments that make your life easier. However, it can become a problem for you to get cell phone financing if your credit history leaves much to be desired. But the good news is that it’s still possible if you choose the right cell phone plan.

A cell phone plan is an agreement concluded with a cell phone provider that implies paying for your phone and its monthly usage, including calls and text messages. When you need a new phone, there are two options that you can consider. First, you can buy a phone outright, which means you need to pay the whole cost upfront. But when you turn to a plan, you can sign a contract and repay the cost of your cell phone in parts month by month. It makes it easier to purchase a gadget, but you won’t own a phone until you pay it off.

get a phone with bad credit

What Are Available Types of Cell Phone Plans?

There are two main types of cell phone plans, so it’s important to learn the details before you choose one, especially if you’re going to get a smartphone with a credit score lower than 500.

Monthly Plan

A monthly plan is exactly what it sounds like. It’s a plan with the necessity of making monthly payments and having an account with a phone company. You must furnish an unlocked cell phone or purchase a new one from the phone company in order to sign up for a monthly plan. You can opt to use any mobile carrier since an unlocked cell phone is not tied to a particular network.

Depending on your budget, phone companies offer various monthly rates. You can check out a cell phone plan review to find the most affordable monthly plan that fits your needs. Some of them can offer unlimited data or phone call options for as little as $30 to $45 per month.

There are affordable monthly options based on gigabytes of data if you don’t require an unlimited talk option. Thus, you can look for a cell phone plan with limited talk and text if you don’t expect to use your phone every day. The drawback is that you have to wait until the following payment cycle to get more data after you reach your data cap.

Prepaid Plan

Prepaid plans are popular with people who want to avoid entering a long-term commitment with a carrier. To use a prepaid phone plan, you must purchase minutes. The same fundamental features as regular cell phone plans are available with prepaid plans. You can still choose how much money you want to spend talking.

You must purchase a cell phone and a separate prepaid card if you want a prepaid plan. If you purchase the prepaid plan package from a merchant, you can even be given a discount. Prepaid cards enable limitless talk, text, and data usage and are available in a range of price points. Prepaid cards start at $10, but the cost varies depending on the kind of cell phone you choose.

You might prefer the simplicity of a prepaid plan if your credit score is low. A credit check is not required in order to purchase a new cell phone. Prepaid plans may be less expensive, but they typically have fewer features and perks. Prepaid plans are available directly from phone carriers or through the majority of large retailers.

What Payment Plan Should I Choose: Prepaid Plan vs. Monthly Plan

It always depends. We can just show you the difference, but the decision is always up to you, based on your creditworthiness and other factors. Prepaid cell phone plans can be a better solution for people who have a bad credit history. They are more affordable and can help you save money if you’re not an active mobile phone user. However, prepaid cell phone plans have a low data cap, and the network will slow your speed after you hit it.

At the same time, monthly plans bring more benefits with them regardless of their high costs. For example, you can get access to streaming services or get a new phone with the contract. But the main drawback lies in the lack of flexibility. If you’re going to cancel your monthly mobile phone plan, get ready to pay high cancellation fees. Therefore, which plan is better always depends on the individual. Just choose a cell phone contract that meets your needs.

Why Does a Cell Phone Company Perform a Credit Check?

Cell phone companies typically conduct some sort of credit checks to estimate your ability to manage finances and make your bill payments in a timely manner. Some of them can access your credit report details through major credit bureaus, while others check your credit and payment history through alternative means. They do so to estimate the risk of dealing with you and decide whether it is worth it.

What Is Credit Score Typically Required to Get Phone Financing?

Mobile phone companies typically consider bad credit any credit score that is lower than 600. Thus, you may face some problems while trying to get a new cell phone or a mobile plan with such a credit score. However, it always depends on the company and many other factors. But in most cases, cell phone service providers are more likely to deal with customers who have a good credit score or higher. Here’s the understanding of credit score range according to FICO:

Poor credit score — 300-579

Fair credit score — 580-669

Good credit score — 670-739

Very good credit score — 740–799

Excellent credit score — 800-850

Is It Possible to Get a Phone with Bad Credit?

Although a low credit score may become an obstacle, it’s still possible to access new phone financing with less-than-ideal credit. However, mobile phone companies may set some additional requirements to offset the risk. For example, you may be obliged to put in a security deposit or get less beneficial conditions, including higher interest rates.

phone financing bad credit

Tips on Getting Phone Financing with Bad Credit and No Deposit

If you need to get a cell phone, but your credit is considered fair or poor, here are some tips that will help you get the best possible deals.

Add to a Family Plan

A family plan usually includes a variety of phone lines and a primary account holder. If a primary account holder meets the company’s credit score requirements, you can also enjoy all the benefits while having bad credit. However, primary account holders are also liable for covering the cost of those extra phone lines. The number of phone lines that can be added to a family plan varies on the phone provider.

Find a Co-Signer

If your friend or a family member has good credit, you can ask them to become your co-signer. This way, their credit rating will offset your bad credit for a phone contract, so you will be able to get a cell phone plan on beneficial terms. But keep in mind that your co-signer will be responsible for covering your monthly bill if you experience some financial hardships.

Put a Security Deposit

Sometimes a cellular service provider can allow you to make a down payment toward the cost of your mobile phone. This way, the company will get the money to cover expenses caused by non-payment. Therefore, when you pay upfront, even if it’s not the whole cost, a cell phone company tends to trust you more and is not very focused on your credit score.

Get a Prepaid Plan

A prepaid plan implies that you pay in advance, which means before you use any services. Thus, it commonly doesn’t require a credit check as a service provider already gets the money from you and has no risk. Therefore, this plan is very popular with people who experience credit issues.

Steps to Take to Improve Your Credit History

You may wonder why your credit score is important, but it’s impossible to deny the fact that it is. Therefore, the best way to get any financing in better conditions is to improve your credit score. Here are some available ways to do this.

Use Credit Builder Loans

Credit builder loans were created to boost your credit while you make on-time payments. They are the amounts that are kept in a bank account while you pay your loan balance. When you make your payment on time, this fact is reported to major credit bureaus, so your credit score starts to grow. These loans don’t require you to have good credit to apply.

Make On-Time Payments

Paying your monthly bills without delays is crucial for your credit score, as it makes up about 35% of its value. Thus, when you pay your bills on time and don’t delay your loan payments, you become a reliable customer in the eyes of lenders, landlords, and cell phone companies.

Don’t Overburden Yourself with Debt

The more debt you have, the harder it becomes to live. Moreover, it affects your credit score too. Try not to take many loan applications at once as it can show you’re in a difficult financial situation.

Try to Keep Your Credit History Long

Your credit history will be enhanced if you can successfully manage repayments, especially over a long period of time. Additionally, be careful with closing your accounts. Keep those with high credit limits but low balances open to strike a good mix of credit and demonstrate your financial stability.

Final Thoughts on Financing a Phone with Bad Credit

Of course, it will be easier for you to get approved for a mobile phone if you have a good credit score. But even if your credit rating is imperfect, you can still get a phone with bad credit. Choose the right individual cell phone plan or consider joining a family plan. Also, you can consider some additional tips on getting a no-deposit phone financing with bad credit or improving your credit score to get a higher chance of obtaining a phone plan.


What Do I Need for a Bad Credit Cell Phone Plan?

All you need is to choose the right mobile phone plan and take some steps to improve your credit. Also, you can consider a family plan, use a co-signer, or get a prepaid mobile phone plan.

Why Do Cell Phone Companies Take Care About Customers’ Credit Scores?

They do it to make sure you will be able to cover your expenses associated with cell phone usage. The higher your credit score, the higher your chance of getting a better cell phone plan.

How Can Customers Get Cell Phones with Bad Credit?

People can get cell phones with bad credit if they demonstrate a steady income. This way, they need to apply for the right cell phone plan and get approved after going through a soft verification process. Also, customers with bad credit can use co-signers or put in security deposits to improve their chances of getting a new mobile phone.

Apply for a loan now and get the cell phone you need despite bad creditApply

Kerry Vetter

Written by Kerry Vetter

Written by Kerry Vetter

Kerry is a finance expert thanks to her Boston College education during the 1990s. Today she shares this valuable knowledge through the pen and online from her home in Chestnut Hill, Massachusetts. The years of experience results in relevant, practical and wise advice.

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