An outstanding cell phone bill not only creates conflict between you and your wireless provider, but it also could end up putting you in hot water with other creditors. The potential impact to your credit report is indirect. In most cases, the cell provider must enter collections before the debt appears on your report.
Most mobile companies send monthly bills. If you don't pay the billed amount by the due date, you may get hit with a late payment fee. Eventually, the cell phone company will begin making calls on the account and sending follow-up letters to get you to resolve past-due amounts. You could face service suspension as well. In general, cell providers won't turn your account over to collections without exhausting other dispute resolution procedures.
After a few months, the provider realizes it isn't going to resolve the dispute and likely turns your balance over to collections. At that point, your debt is typically reported to credit bureaus as a collections account. Delinquent debt, such as collections accounts, are among the most negative citations to have on a credit report. The drop in your credit rating could lead to trouble getting new loans and reasonable interest rates.
Other Creditors Respond
Other creditors commonly respond when they see the negative report on your credit as well. They may decide to increase your interest rates on cards, even if you have been on time in paying those bills. They must normally give you advance notice to do so. The cumulative effect of multiple creditors raising current interest rates, combined with your difficulty in getting good rates in the future, makes your delinquent cell phone balance a major headache.
As with any service provider or creditor, your best approach if you have trouble paying bills is to contact them early. Providers usually realize their best chance at seeing money you owe them is to work with you as best they can. The cell phone provider may discuss ways to spread out repayment of your past-due account so you can catch up. Alternatively, it may discuss different types of services that reduce your monthly bill.
- DebtSmart: Can an Unpaid Cellular Phone Bill Be Reported On My Credit Report?
- Kiplinger: How Unpaid Debts Affect Credit Scores
- 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.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.