A person with a bad credit history will usually have a difficult time getting credit. This also applies to cell phones. When you apply for a cell phone you are asked for your social security number and/or driver’s license number. These are used to verify your identity and to run a credit check on you. If you do not meet the minimum credit requirements of the cell phone provider, you will be denied. In some cases different mobile phone providers have different credit criteria so denial at one does not automatically mean denial at another. However, bear in mind that each time a merchant pulls up your credit report it counts as a credit inquiry and could lower your credit score. You are better off knowing what is on your credit report before applying for a mobile phone. If you think your credit history is bad enough to be denied, it may be advisable for you to consider other alternatives to regular one or two year mobile phone contracts.
Take Baby Steps: Prepaid Plans
Prepaid cell phones plans can be considered bad credit mobile phone contracts and are an alternative to regular mobile phone contracts. With a prepaid plan you are pretty much guaranteed a mobile phone. Most prepaid plans require that you have a credit card or a visa or mastercard debit card which is billed automatically each month for your upcoming monthly service. So in a way the mobile phone company is almost guaranteed to get paid as long as your financial institution honors the monthly transactions. With a prepaid plan, you get the advantage of having a monthly plan without the long contract terms and the strict credit rules. Also you only pay for what you use and nothing more. You can almost always downgrade your plan at anytime if you feel you are paying too much and not fully utilizing the services included in your chosen plan. Several cell phone companies offer prepaid plans including AT&T, T-Mobile, Cricket and Verizon.
Another option that is similar to prepaid plans is the pay-as-you-go plan. Instead of having a monthly plan with a fixed set of minutes and service features you are often required to pay by the day. On days you do not use the phone you are not charged. For example, Cricket offers a pay-as-you-go plan called PayGo which costs between $1 and $3 a day depending on the features you choose. You fund your account and top it up regularly based on your usage. Other pay-as-you-go plans include AT&T’s GoPhone and Boost Mobile’s Pay As You Go.
Another Alternative: A Deposit
One more alternative to get guaranteed mobile phone contracts for people with bad credit is to offer a deposit. If you do not meet their credit criteria, a number of cell phone companies will ask you for a deposit which is usually refundable at the end of the contract term or at the end of one year. This amount is often applied toward your regular phone bill at the time the refund is due. For example Sprint requires deposits of about $125 per plan per phone for certain customers who may be considered credit risks and this is usually refunded after one year. So it is possible to get a mobile phone even if you have bad credit and you may end up having cheaper phone service and saving lots of money in the process.