Want The Latest Smartphone? Better Check Your Credit Score First
You already know your credit score affects your ability to get a loan, credit card approval, and mortgage rate, but did you know it can stand in the way of your next cell phone plan?
Similar to bankers and lenders, cell phone service providers check your credit score before they give you mobile airtime. They are essentially lending you credit in the form of minutes of talktime, and they want to make sure you pay back at the end of the month. That means bad credit may earn you an expensive phone plan or rejection altogether. So before you choose whether you want the iPhone 4 and the HTC Evo 4G, read ahead to prep your credit score.
How Your Cell Phone Plan Affects Your Credit Scores
Your credit score can be affected in two ways:
- Carriers typically do a hard inquiry on your credit report, which drops your score just a few points, to check your credit history and credit score to assess your creditworthiness.
- Your cell phone payment history isn’t usually reported on your credit report UNLESS you default. If you miss payments, an unpaid cell phone bill will be sent to a debt collections agency, which will hurt your score and show up on your credit report as an unsettled debt.
How Your Credit Score Affects Your Chances For A Cell Phone Plan
First off, each cell phone carriers use their own proprietary credit scoring model to assess your likelihood of defaulting on your monthly cell phone bills. The bad news is that a poor credit score can ruin your chances of getting your hands on the hottest smartphone. Here’s where you may stand:
- Poor Credit — A cell phone carrier may decline your application. Build your credit up and try again in a few months, or settle for a prepaid cell phone.
- Average Credit — Your application may be approved, but the carrier may put a spending limit on your account or require a security deposit that can range from $250 to $1,000. If your credit score is shaky, the spending limit will deter you from racking up debt, and the security deposit is insurance in case you default.
- Good Credit –Lucky for you, your high credit score may earn you approval on your cell phone plan at the best price and with no deposit or spending limit.
Which magic credit score number will send you home with a high-tech, new cell phone in your pocket? It really depends on the approval practices of your cell phone provider you have, so build and maintain a healthy, stable credit history so you are perceived as creditworthy and cell phone ready.
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Date: June 11, 2010
Categories: Credit Score