Having a poor credit score can bring consequences that go beyond the inability to qualify for credit cards or conventional loans. It can also impact your ability to join a cell phone plan. You can still find a carrier even if you have a subpar credit score, but it limits your choices and increases your costs. If your score is poor enough, a prepaid phone plan may be your only option.
FICO Score Check
Cell phone companies check your credit score as an indication of whether or not you’ll pay your bill each month. Without a good credit score, you’re not going to get the premium offers that carriers provide to those with a better track record in managing credit. While there’s no set formula that determines what credit score qualifies you for the best deals, T-Mobile reports that half of Americans don’t have a high enough credit score to qualify for the best wireless plans it offers.
Poor Credit Disadvantages
A higher score grants you access to perks like free basic phones, zero percent down contracts and the ability to pay for high-end smartphones via an installment plan. A low credit score, meanwhile, impacts the type of plan you can get and the price you’ll pay. Sprint, for example, uses the customer’s credit score to determine whether a deposit will be required, how many lines they’ll be able to place on the account, and whether the account will have a spending limit. Verizon and AT&T Next won’t allow those without good credit to take advantage of features such as the ability to pay off a new phone over time or upgrade early.
No Credit Check Option
A poor credit score doesn’t disqualify you from participating in a cell phone plan with a major carrier. Sprint, for example, doesn’t require a credit check. However, for the no credit check option, you’ll have to provide your own device, purchase a certified pre-owned phone, or buy a new Sprint phone at full price. It also helps if you have a pre-existing relationship with the carrier. T-Mobile judges existing customers on whether they’ve paid their bills on time over the previous 12 months rather than on their credit scores.
Long-term Effects Minimal
While a poor credit score might cost you more money upfront, in the long run you won’t pay much more than someone with better credit. Consumer Reports notes that all major carriers’ promotional plans on new phones essentially amount to an interest-free loan that’s paid off over two years on your bill. If you pay more upfront, you’ll make that up with a lower charge every month. If you pay a deposit, you’ll get that back when you change carriers or discontinue service.
Prepaid Phone Plans
If all else fails, you can get a prepaid phone plan if you don't have good credit. In a prepaid plan, you purchase the amount of cellphone services you need on a monthly basis. You can acquire your phone separately and purchase the plans ad hoc in most cases. However, some plans limit the types of phones that work with its services, and the cost rises as your minutes, texts and required services increase.
- Sprint: FAQs About the No Credit Check Option
- CNN Money: T-Mobile Says Bad Credit Means Half of Customers Don't Qualify for Deals
- Business Insider: The Crucial Credit Lesson Everyone Should Learn From 'The New Girl'
- Consumer Reports: T-Mobile Vows to End Bad-credit Phone Pricing with 'Smart Phone Equality' Policy
- P.C. Magazine: The Best Cheap Prepaid Phone Plans You've Never Heard Of
- Equifax. "4 Ways Your Credit History May Affect Everyday Life." Accessed July 7, 2020.
- FICO. "Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?" Accessed July 7, 2020.
- Experian. "When Does the 7 Year Rule Begin for Delinquent Accounts?" Accessed July 7, 2020.
- Experian. "Add Your Cell Phone Payments With Experian Boost." Accessed July 7, 2020.