Phone Plans For People With Bad Credit
- Prepaid Plans are perfect for those with 'bad' or 'no' credit.
- These plans require no credit check .
- Totally flexible - no contracts - leave when you want to.
- Pay only for what you need -- no bill shock.
Frequently Asked Questions
What is Bad Credit and How Does it Affect People Who Want to Buy a Phone Plan?
“Bad credit” is a term which applies to those who have a credit rating which is below average. For example, with one of the world’s leading credit reporting agencies Experian, a score of 549 or less would categorise a user as having ‘bad’ credit.
Because a postpaid phone plan is considered a credit arrangement, a bad credit rating could mean that you’d find it challenging to sign up for specific postpaid phone plans successfully.
Don’t worry, you have a variety of very appealing options available to you which will give you a phone and a SIM at a very reasonable cost.
How Can I Tell if I Have a Bad Credit Rating?
Several websites feature an online tool that is safe and secure and importantly, these free online services will not negatively affect your credit score.
‘Get Credit Score’ is one such free resource that you can use.
Just register an account, answer a few simple questions, and within minutes you will have the information you need.
Are There Any Legitimate Reasons People Might Experience a Period of “Poor Credit”?
There are a multitude of reasons why people may periodically experience issues with their credit rating.
- Rising debt among the younger generation is seeing many Australians struggling to pay their bills, and as a result, their credit rating can be affected.
- Overspending is one of the primary reasons people have problems with their finances, resulting in poor credit.
- Loss of income, failed businesses, failed relationships, involvement in an accident or being injured, unexpected expenses, and rising interest rates or other living costs.
There is no shame to any of these situations. It just means you need to pick a phone and plan which works for you – and around the constraints which might be imposed upon you when you have a ‘bad’ credit rating.
All of these factors can make it hard for people to service loan repayments, pay their bills on time, and subsequently maintain an excellent credit rating.
What Are The Best Phone Plans For People With a Poorly Scored Credit History
Pre-paid plans offer all of the benefits and features of post-paid phone plans, without having to jump through the credit assessment hoops. If you are worried about your credit history, or just mindful of preserving your credit rating and don’t want to jeopardise it by signing up to a phone plan that you can ill-afford, then a pre-paid phone plan may be an ideal solution for you.
Do You Need a Strong Credit History to Buy a Phone Under a Contract?
While you don’t necessarily need an excellent credit history to get a phone under a contract, Telcos will refuse you a phone contract on the basis of your credit score – if it is low.
If you are worried that your credit score is not as strong as required for a phone plan approval, talk to a few phone companies and try to find out what their policy is, or just go down the pre-paid route.
What Options Do People With a Bad Credit history Have When it Comes to Buying a Phone and Plan?
Pre-paid phone plans may not be the only option. If you have had a bad credit history in the past, remember that your credit score is not constant.
Credit scores are a dynamic number that are subject to change. Perhaps you have taken significant steps in recent years to build up your credit score, and now some phone companies will look upon you favorably. Whatever your situation, there is a need to stress, there are many phone plan options for people with bad credit.
What's good
- Prepaid plans are perfect for 'Credit Challenged' individuals.
- No contract required and no credit check.
- prepaid data allowances are comparable to post-paid plans.
- Buy your phone outright. It is probably the best thing to do anyway.
- Convenient -- renew online.
- Different payment options -- credit or debit card, cash, PayPal online, BPay from bank.
What's bad
- Must purchase phone outright - can be expensive initially.
- Must pay for prepaid plan credits in advance - inconvenient for some.
- Research and due diligence required to determine the right plan for your needs.
What is ‘Bad Credit’ – How Does Bad Credit Influence The Type of Phone Plan You Need?
What exactly does ‘Bad’ Credit mean?
The term “bad credit” is applied to anybody who scores low on one of the leading credit rating systems. A bad credit rating can significantly reduce your borrowing capacity and chances of getting credit approval, such as when applying for a mobile phone contract.
Your credit rating is calculated based on your credit history; if you have ever defaulted on a loan repayment or failed to pay a bill on time or failed to pay an invoice or debt at all, information has likely been gathered and stored on your credit record. This information can negatively affect your credit rating and possibly result in you receiving a bad credit score. Your credit score is designed to provide information to help credit providers ascertain how responsible you are at repaying back loans or credit arrangements, and provide insight into the likelihood that you have, to pay credit providers back.
Experian is one of several global leaders who provide analysis, used by thousands of companies in Australia and the rest of the world, who provide loans, credit cards or any other credit arrangement. Their credit rating system is between 0 to 1,000. The higher the number, the better your credit score. Your score is dynamic and likely to change over time, so if you do have a less than ideal credit rating, don’t despair, there is plenty you can do to improve it in time.
The Experian credit rating system, widely used in Australia. Source.
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Some of The Reasons The Average Person Might Experience a Period of “Bad Credit”
- Late Payments or Missed Payments
Many people have at least a couple of existing credit facilities such as a mortgage or personal loan, car loan, credit cards, etc. If payments are missed or significantly late, the credit provider has the authority to report you to the credit reporting agencies and inform them of your default. Telecommunication companies can be particularly active in reporting negative matters on their customer’s credit history. Once a negative listing is recorded, it can stay on your report for between 5-7 years, depending on the type of listing. This blight on your name can significantly impact your capacity to secure credit, restricting your options for financial aid, including the credit you will need to sign up for a phone contract with a Telco. - Credit Inquiries
Responsible people are also not immune to instances that can damage their credit rating. A bad credit score can come about from just making credit inquiries. When applying for a credit card or a loan, lenders access and use the data collected, and this accessing of data leaves a footprint on your credit report. Credit footprints are held on your credit file for 5 years, and if you have numerous footprints on your credit record, they can negatively impact your credit rating as well, reducing your overall credit score. - Limitations of Less Than Perfect Credit History When it Comes to Phone Plans
Most people are aware that your credit rating can affect your ability to secure a home loan, personal loan, or credit card; however many are unaware that bad credit can also negatively impact your chances of getting approval for a simple phone plan. It is important to understand that a phone plan is a credit agreement with a Telco, so just like any other financial assistance, a good credit rating is generally required.
Which Phone Plans Require a Credit Check?
Postpaid plans demand some form of credit check before an approval is granted. If you have issues with your credit rating, perhaps there is another option which is just as good.
Credit assessors will want to take a look at your credit history to ascertain your ability to service the monthly payments required.
They will be checking out things like:
- Overdue accounts or missed payments – including those that have been finalised
- Credit applications
- Bankruptcy status
If you have never been late in any of your repayments, have no fines or infringements outstanding, do not own a business or have previously owned a business that has had problems with debt, then you may be a good credit candidate and have nothing to worry about. If, however, you have had some issues in the past – even if it was 10 years ago – with these or anything else relating to financial matters, you may be denied. Regardless, if it proves difficult to get approval for a post-paid phone plan, there are other options available to you.
The exception to the postpaid credit check rule is Telstra’s new Upfront Postpaid plans, which require you to add a credit/debit card or bank account on file that will be charged automatically. Before your Telstra upfront postpaid plan is activated, your payment method of choice will be charged – this upfront scheme means you won’t need a credit check.
What Phone Plans Do Not Require a Credit Check?
Prepaid phone plans are the obvious way to navigate the credit report obstacle if your credit rating is below average. Historically, prepaid plans have been a “no frills” category for phone companies, which were generally less expensive but lacked substance. Nowadays, with bigger data allowance and unlimited national calls and texts, prepaid phone plans offer customers a genuinely viable alternative option to lock-in contracts.
Because you are purchasing your phone credit up front, credit checks are not required.
Methods of Paying Pre-Paid Phone Plans
You have a number of options to recharge your prepaid phone plans with your service provider. You can use a credit card, debit card or PayPal online. Alternatively, you can use BPay to pay directly from your bank account or by using cash at any outlet that sells recharge vouchers for your specific mobile carrier.
Are You Worse Off Just Because You Have to Approach Your Phone Plan in This Way?
No! Absolutely not! As mentioned earlier, prepaid phone plans have come a long way in recent years. Nowadays you do not pay a premium for the added benefit of ensuring you don’t run up a hefty phone bill each month. Prepaid plans today are packed with data allowance and many other features that make them comparable to their post-paid counterpart. Gone too are the days of purchasing a recharge voucher from the local Woolworths or Coles – you can now auto-renew online at any time, making your prepaid plan just as convenient as a post-paid plan.
If you have bad credit, the last thing you want to do is further stretch your budget by over-spending on your telecommunication requirements. Although having a mobile phone and internet on the go is virtually essential in today’s day and age, with a little research and due diligence you can find a plan that fulfils your needs without breaking the bank – and avoid exacerbating your credit rating woes.
The best option might be to purchase outright an affordable Android phone that is not locked to any specific network. Then purchase one of the many SIM-only plans that are available to you, from any one of the smaller, more competitive MVNOs (Mobile Virtual Network Operators).
Final Words
There is no shame in having bad credit. Even responsible people can find themselves with a blemished credit rating. I used to sit next to the team who called overdue accounts at Optus, and if you experienced problems with your ability to pay your Optus phone bill, then you would have received a phone call from this department. The guy directly next to me would speak with such patience, he well understood and always showed sincere compassion for those people on the other end of those calls, knowing that financial hardship can affect anybody and everybody at any time.
There is also no shame in signing up for a prepaid plan. In fact, with the recent updates in the pre-paid offerings, it really makes a lot of sense, not only for people who have bad credit but anybody who is on a strict budget, or looking to save money on their monthly phone bill expenditure – that is just about everybody right?
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