Do I need a credit check for a mobile phone deal?
A mobile phone contract can make owning a mobile (especially a smartphone) more affordable, but will you need a credit check? Here, we explore when and why a mobile provider might check your credit report and what your options are if you’re turned down.
Find the best mobile phone contract and SIM deals for you with Uswitch.
Will I need a credit check to get a mobile phone?
Whether or not you need a credit check will depend on the type of deal you want and the provider. Broadly speaking, you probably won’t need a credit check if you buy a pay-as-you-go SIM card. You also may not need one if you choose a cheaper phone package.
However, if you’re after one of the latest smartphones complete with lots of data, then it’s highly likely that the seller will check your credit report, and carry out what’s called a ‘hard search’. This is when they’ll look at your credit history in detail to gauge how reliable you are at making repayments. Hard searches leave a footprint so your application for credit will be visible to other lenders.
The opposite of a hard search is a soft search. These are usually carried out just to verify your details, such as name and address. Crucially, a soft search isn’t visible and won’t show up as an application for credit.
What credit score do I need to get a mobile phone contract?
There’s no specific minimum score needed to get a mobile phone contract. Instead, the mobile phone provider is more likely to review your recent credit history to get a better idea of how you manage money. This is because a pay-monthly mobile phone contract is fundamentally a type of credit agreement, and the seller needs to be confident that you’ll pay back what you owe, on time and in full.
What is a credit score and how is it calculated?
Your credit report (or credit history) sets out any credit or loan agreement you’ve had or currently have. Your ‘score’ is based on how effectively you manage the credit you’ve been given and how consistent you are at meeting repayment deadlines. Essentially, the better you manage your finances, the higher your score is likely to be, which increases the chances of you being approved for future loans or credit.
You should bear in mind that credit scores are generated by three main credit reference agencies (CRAs), these are:
- Experian
- Equifax
- TransUnion
Each CRA uses their own credit scoring system which is why it’s also difficult to say what score is high or low. For example, with Experian, a ‘good’ score is anything between 881-960 but at Equifax, ‘good’ ranges between 631-670.
Can I check my credit score?
You can, and it’s actually something you’re encouraged to do, so that you can be sure all the details recorded are accurate.
Of the three CRAs, there’s no one main agency and lenders and retailers will all use different ones. So, if you do decide to review your scores, it’s worth checking all three CRAs. You can check for free by visiting:
- www.experian.co.uk
- clearscore.com
- creditkarma.co.uk (TransUnion’s partner site)
Why can’t I get a mobile phone contract?
If your application for a phone contract has been rejected, it could be for any number of reasons, for example:
- Missed payments – you can be denied more credit if your report shows that you’ve missed payments in the past. Similarly, if you’ve failed to pay back loans altogether (defaulted), lenders may be unwilling to take the risk.
- No credit history – if you’ve never used credit and have no credit history, you could also struggle to get a phone contract. It might seem ironic, but it simply means you’re an unknown ‘risk’ and lenders might not be willing to take a punt on you.
- History of money struggles – official records that document money struggles can make it much harder to get credit. This includes county court judgements (CCJs), individual voluntary agreements (IVAs) or a declaration of bankruptcy.
- Your identity can’t be confirmed – if you’ve moved around a lot or your name isn’t on the electoral roll, lenders could find it difficult to confirm who you are, which can make them reluctant to accept applications for credit.
Bear in mind that even if one of these reasons apply to you, it doesn’t automatically mean you’ll be rejected for a mobile phone contract. In some cases, the retailer or lender might ask you for a bigger upfront payment or deposit.
Should I reapply for a different mobile phone contract?
If you’ve applied for a pay-monthly contract and been turned down, it’s best not to apply for any further deals. Remember – when you apply for credit, lenders will carry out a hard search which leaves a footprint. Multiple applications in a short space of time can be a red flag that suggests you’re in real need of credit.
So, before you keep applying for deals, it’s a good idea to take a step back and take the time to check your credit report. Especially if you genuinely don’t know why you’ve been turned down.
When you check your report, make sure your personal details are all correct, including the spelling of your name, date of birth and your address. By law, CRAs must only hold accurate data about you so if anything is wrong, you should ask them to update it.
What can I do if I can’t get a mobile phone contract?
If you can’t get a mobile phone deal but do need a phone, consider:
- Buying a pay-as-you-go SIM card and use it in an old handset. You may need to unlock the phone but you can do this by contacting your old provider or network.
- Choosing a phone plan with a less expensive phone. The newest smartphones are usually always going to be the priciest and more likely to need a credit check.
- SIM-only monthly deals. You’ll still usually need a credit check, but monthly SIM-only deals are often far cheaper than taking out a whole package with a phone. The lower monthly payments also mean that you could stand a better chance of being approved for this type of contract.
Read more in our articles on What can I do if I’m refused a mobile phone contract? and How do I get a mobile phone deal with a poor credit score?
You can start your search for a monthly contract or SIM-only deals here with NimbleFins and Uswitch, together, we can help you find a phone deal to suit both you and your budget. Or first read more about the best mobile phone deals in the market.
Find the best mobile phone contract and SIM deals for you with Uswitch.