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Can You Get A Phone Contract With Bad Credit?

A phone contract is a form of loan. You're trusted to keep up with repayments, just like with any loan. So can you get a phone contract with bad credit?
can you get a phone contract with bad credit

Having good credit is a huge asset when it comes to taking out any form of a loan. It goes a long way in setting you up as a trustworthy borrower. Having a positive credit rating means you can be relied on to make their repayments on time. But what if you have bad credit? Perhaps you borrowed beyond your means and were unable to meet the repayments. Or maybe unexpected expenses cropped up, pushing you beyond your financial limits. The truth is, bad credit can happen to anyone. While it isn’t an ideal situation to be in, it’s important to look at where your limitations lie when it comes to bad credit and your borrowing ability. One question that frequently crops up is: can you get a phone contract with bad credit?

Signing Up For A Phone Contract

Most commonly, when you sign up for a phone contract, you are receiving a brand new phone upfront, then paying off the cost of it. On top of this, you will usually have a mobile usage plan as part of this ongoing contract. Phones these days aren’t cheap. Entering into a phone contract places a risk on the lender that you may not be able to pay back the phone. Unlike entering into a mortgage where the house can be used to secure it, a new phone is considered bad credit and holds no value as a secured asset.

For this reason, it is easy to see why lenders rely heavily on your credit history to determine whether you are worth the risk for a loan.

So, can you get a phone contract with bad credit?

bad credit

What Is Bad Credit?

Firstly, let’s take a look at bad credit and what it might look like on your credit file. Here are some listings that reflect poorly:

  • Late repayments: these are recorded on your file and show that you haven’t been able to keep up with your debt in the past.
  • Credit enquiries: making too many credit enquires indicates that you are under financial stress.
  • Debt agreements: entering into these agreements is a sign you have struggled to honour the terms of your debt.
  • Bankruptcy: as expected, this is a big red flag to any potential lenders.

These are just some of the listings on your credit file that will contribute to an overall low credit score. As a result, lenders will be less likely to take you on. Of course, there are options available. So let’s dive in and answer the question: can you get a phone contract with bad credit?

phone contract bad credit

Can You Get A Phone Contract With Bad Credit?

When it comes to taking out a phone contract with bad credit, you have a number of options available to you. It is about working out which one is best suited to your situation:

  1. Clean up your credit report: first things first, take a look at your credit file. Check if any incorrect listings have been made. You can have these taken off to boost your credit rating, which will put you in a much better place. If you need help, you can always head to a credit repair company.
  2. Choose a sim only plan: the biggest risk when getting a phone contract comes when you are paying off the phone along with your usage. To eliminate this risk for lenders, your best option would be to buy a phone outright. From here, you can enter into a month by month contract for your usage. This takes away all risk to the lender and makes it easier to take out a phone contract. These phone plans don’t require credit checks and are an easy option.
  3. Taking out a bad credit loan: you will be able to find a lender who will allow you to take out a loan with bad credit. You can then use this money to buy your phone outright then enter into a sim only contract. Of course, this is a more risky move for you and can involve high-interest rates.
  4. Apply! There is no harm in putting yourself out there and applying for the phone contract to see if you get accepted. If not, go back to square one. Consider whether it is worth cleaning up your report, or going for a sim only plan.

phone contract

Entering a Phone Contract

It is important to find the best option for your circumstances. The best thing you can do is work on your credit score. This can give you the boost needed to make taking out a loan even easier. But, perhaps you are looking to take out a bad credit loan to help you purchase a phone outright. Speak to the professionals at Bad Credit Loans. We can talk you through your options to help you take out the right phone contract for you.