If you want to avoid hefty deposits, unlock the best device financing deals and enjoy maximum flexibility with your mobile tariff, good credit is essential.
But what happens to your credit score during the application process or over the course of your contract?
Let’s break things down and see what’s really going on and how your mobile plan might impact your credit score!
Be Careful When Hunting for Savings
If you’re not shopping around and comparing options, there’s a good chance that you’re overpaying on your mobile tariff. Prices change regularly--as do allotments and features.
However, depending on how you shop around for the best deals, you might find yourself causing more harm than good. Particularly if you’re applying for a monthly post-paid tariff or device financing.
When you apply for these types of services, most networks run a credit check.
This is to see if you’re likely to pay your bill on time and ensure that you don’t have large amounts of debt already.
If you find that your first choice for service wants a large deposit, we recommend researching further options online instead of applying with another network.
This will reduce the number of hard checks on your credit report.
While the presence of these checks isn’t as bad as something like an account in collections or late payments, they can cost you a few points of that precious credit score you’ve worked so hard to build.
The amount of time these stay on your report varies. However, the inquiry may remain for up to a year in most areas.
Hard Inquiries versus Soft Inquiries
How the check will impact your credit also depends on the type of check the network performs.
Inquiries come in two varieties: hard or soft.
In most cases, hard inquiries are used when a company is trying to make a lending decision--such as extending you a shiny new mobile without a deposit.
Soft inquiries are typically used for things like background checks, routine checks from banks, checking your own credit score or for pre-approved offers from businesses. They often happen without your explicit permission. However, they also don’t appear on your credit report or impact your credit score.
In most areas, running a hard inquiry requires your permission. This is because the inquiry will impact your credit score.
Credit Karma has a great guide on the finer differences between soft and hard credit checks to help assess the risks and outline examples of common inquiry scenarios.
If you're curious what's in your credit report, most credit bureaus offer at least one free report per year. Options include:
Paying My Mobile Tariff On Time Helps My Credit, Right?
It certainly does!
However, late payments on your mobile tariffs or defaulting on your contract is sure to hit your credit score too. Be sure to always pay on time!
Though mobile networks in the UK report timely payments to credit bureaus, you can further improve the credit benefits of your mobile tariff. Pay your tariff with a credit card--and promptly paying off your credit balance!
Bad credit? Check with your local bank for a secured card. While most feature low credit limits, this minimizes the risk of debt running amok while still helping to rebuild your credit!
3 Ways to Reduce the Impact Your Mobile Has On Your Credit Score
There’s no reason that credit checks for cell phones should scare you. In most cases, if you pay your bill on time, there’s little reason for concern. These three tips can help:
Use an online tool to compare prices: If you’re looking for the best deals, you should start with Internet research. Our plan comparison tool outlines all the options from the best UK networks. This lets you sort through your options without sacrificing your credit score.
Go prepaid: As we mentioned in our recent guide--How to Get a Cell Phone Plan With Bad Credit--going with prepaid or no credit check plans removes the hassle--and potential damage--of a credit report entirely. If you don’t mind paying full price for a phone, features and service quality on prepaid plans rival those on monthly contracts.
Sign up for Direct Debit: If you have no trouble paying bills financially but tend to lose track of due dates, direct debit is a must-have. Some networks will even shave a small amount off your monthly bill for using it! No late payments means no worries about future credit woes!
Credit is a complex topic. We hope this guide has helped answer any questions you might have.
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If you have a question we didn’t cover, let us know in the comments below or send us a message. We monitor our comments closely and love hearing from the community!