Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

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Did you know, not only does your credit score impact your mobile phone contract, but once you have one, the way you manage your mobile phone contract can also have an impact on your credit score too. In this article, Experian explain how.


How Your Credit Rating Impacts Your Smartphone

Before you enter into a new phone contract, your mobile provider will check your credit rating to ensure you can make repayments. If you have a bad credit rating, you may find it difficult to get a mobile phone contract. This is because when lending money, lenders want to ensure you are able to repay.

When you apply for a mobile phone, the phone provider completes a number of checks. They look at your application form, information they already have about you (if you’re an existing customer) as well as your credit report, which helps them make the lending decision. If your credit rating is low, this tells the mobile phone company that it is riskier to lend to you. If your credit rating is high, this tells the mobile phone company there’s less risk involved in lending to you.

How Your Smartphone Impacts Your Credit Rating

You may not realise this, but your smartphone contract is actually a credit agreement. The mobile provider gives you goods upfront - i.e. data, calls and texts, which you pay later for. Therefore your repayments are likely to be recorded on your credit file - including whether you’ve missed payments or not.

Lenders like to see that you can pay bills responsibly and on time, so showing that you can successfully manage forms of credit, like a mobile phone account, can help build your credit score.  You can check your credit rating at Experian.

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Representative example: £480 loan repayable over 9 months. 9 monthly repayments of £106.56. Rate of interest 133.1% p.a. fixed. Representative 535% APR. Total amount payable is £959.04