Do you know your credit history affects your chances of getting a contract phone? If you have poor or bad credit history then it can be difficult to get a phone on a plan, but it doesn’t mean you will never qualify for a Smartphone. Here we will discuss 10 misconceptions about bad credit and mobile phone contracts.
Misconception 1: Previous tenants had bad credit rating and the address where I live is blacklisted so I cannot get a contract phone.
This is a myth because credit score is linked to an individual and not to an address. It will not make any difference if the previous tenant had a good or bad credit history. On your credit report there will be no references of the previous tenant.
Until you are financially connected with the tenants, like you have joint bank accounts or loans there will be no issue in getting a contract phone. Your stability can be checked by the network providers so they may be interested to see where you have lived before.
Misconception 2: I have debts in the past so they will not be a problem now
When you are buying a mobile phone contract you may think I have cleared my debts now so these won’t show at present if the credit check is executed. It is a myth.
Your past debts are on the report for at least 6 years. If there have been Iva’s and bankruptcies then it will show. The current way of paying your bills on time and clearing the debts are counted but past debts do impact your credit report and scores.
Misconception 3: No credit history means I can get the phone easily
If you have never used credit in the past it is not easy for the lenders to judge your paying ability. They cannot say whether you are reliable or not and this means they can refuse to give mobile phone contracts to such customers.
They can also ask for a deposit which can be hefty depending on the type of phone you want to purchase. You can get a 12 month SIM only contract so the retailer can know how prompt you are in paying your bills. Do you care about paying the bills before the due date?
Misconception 4: I am declined for a phone contract by Experian so where else can I try?
Experian is a credit reference agency that compiles and holds your data so they do not decide whether you should get a mobile phone or not. This decision depends on the network and they check your details on the credit report. They will also analyze the things you provide them. Then they will calculate the credit score and decide whether you can be given a contract phone or not?
Misconception 5: Phone companies will not do anything as I am on a credit blacklist
There is nothing like a credit blacklist and your ethnicity, color, race or gender does not contribute anything to the credit score. Lenders will only see the existing repayments to check how much you owe at present. They need to be sure that you do not have a lot of credit that can be difficult for you to handle.
Misconception 6: Checking the credit reports affects your credit score
If you check your credit file with the reference agencies like Experian then it doesn’t mean your credit score will be affected. This is incorrect and many people do not check their credit report due to this. They are not aware about the credit history because of this reason.
The credit check will affect the score when a network provider will do it. A credit check done by the lenders flag as a hard check whereas if you check the score on a personal level then this is a soft check on your file.
Misconception 7: Items on the credit history will last a lifetime
Your credit score is checked by the lenders to understand your financial position and most of your credit history information is there on the report for 6 years. No one is interested to know what payments you missed 30 years ago if that has no relevance to your behavior today.
Misconception 8: Paying credit cards in full will affect my credit score in a negative way
Making minimum payments can affect your score negatively but if you pay the cards in full it will not affect your score negatively. Lenders are interested to see if you have made full payments and on time.
Misconception 9: You have a single credit score
Each network uses a different method to calculate credit scores and if one network has declined your application, it doesn’t mean you will not be approved by another network provider. So pay the debts to give your credit score a boost and your score or history will keep changing from time to time.
Misconception 10: I should cancel the credit cards if I am not using them
Cancelling a credit card may seem better because you will not be tempted to run up a debt. However, when you do this on a card that you have been using for a while then this can affect your score negatively.
Unused credit cards help your score as this shows that you are not building up debts. It can boost your score. If you think you will be tempted to use the card then cut the card but keep the account open.
Conclusion: These are 10 misconceptions related to bad credit score and phone contracts. It is vital to understand how credit scoring works and you must work towards a good credit rating to get an approval for contract phones. Though you can get mobile phones on contract for bad credit but they have different terms and conditions. It is better to keep your credit score healthy to qualify for a contract phone and other credit products easily.