Why mobile phone credit checks needn't be a barrier

Submitted by Abi on 26 November 2014 - 10:38am
Beat the credit checks with a SIM only deal

Most networks require a credit check before they will sell you a mobile phone contract; particularly if it comes with a premium smartphone. This can be a barrier if you have a poor credit score, either because you have a bad credit history or just no credit history. 

SIM-only is an easy way to build up your credit rating and improve your chances of being accepted for a phone contract in the future. Our guide tells you all you need to know about mobile credit checks and what to do if you are turned down for a mobile phone contract.

What is a credit check?

Credit checks are reviews of your financial history and are carried out anytime you apply for credit such as loans, credit cards, mortgages and mobile phone contracts. Your likelihood of being accepted for credit can be affected by a number of things including high levels of debt, missing or late payments, not being on the electoral register and even by never having had credit. The checks are used to assess whether you are able to make the repayments on your contract and to prevent fraud by checking you are who you say you are. 

Which networks use credit checks?

All of the big four mobile network operators and most of the smaller virtual network operators use credit checks to verify your suitability for a mobile contract. No credit checks are needed by The People's Operator, Shebang and giffgaff, as you can see from the table below.

Which Mobile networks uses credit checks?
EE use credit checks for all of their mobile contracts You will have to pass a credit check with this network

You will need to pass a hard credit check with all of the networks shown with a tick if you want to get a mobile phone or SIM only contract with them.

You will need to pass a credit check to get a contract with O2 You will have to pass a credit check with this network
Credit checks are required for all contracts with Vodafone You will have to pass a credit check with this network
You will have to pass a credit check with this network
Virgin Mobile use credit checks for all mobile contracts You will have to pass a credit check with this network
You will need to pass a credit check with Tesco Mobile You will have to pass a credit check with this network
You will have to pass a credit check with this network
Good news! you don't need a credit check with giffgaff You don't need to pass any credit checks with these networks

You don't need a SIM credit check for giffgaff but the pre-pay nature of their Goodybags means they won't improve your credit score.

Great news! Thera are no credit checks with The People's Operator and their pay monthly plans help you build your credit score You don't need to pass any credit checks with these networks

The People's Operator don't use credit checks and let you take on rolling contract - good if you want to build your credit rating. 

Shebang offer 100% acceptance rate for mobile deals including a limited range of phone contracts You don't need to pass any credit checks with these networks

There are no credit checks with Shebang, but their deals are more expensive than with other networks.

Who conducts the credit check?

Checks are performed by credit reference agencies at the request of the network. The agency reviews your personal credit history by looking at the electoral roll, court records such as County Court Judgements and bankruptcies plus your financial history including your interactions with banks and other lenders.

If you want to, you can request a copy of your credit report by contacting one of the credit references companies below and signing up for a free trial. 

Credit reference agencies

 

The networks that use them

Equifax is the main credit reference agency used my mobile operators

Tel: 0844 335 0550 or visit www.equifax.co.uk

Three, O2, EE, Tesco Mobile, Virgin Mobile and Vodafone

Experian is used by mobile networks to score your credit rating

Tel: 0344 481 0800  

or  0800 013 88 88

or visit www.experian.co.uk

Three, O2, EE and Vodafone

Callcredit is used by Three to rate your credit history

Visit www.callcredit.co.uk

Three

What happens if my credit application is rejected?

If you have been refused don’t worry, there are plenty of ways to get a mobile contract as well as things you can do to improve your poor credit score.

Re-apply with a different provider

The good news is each company considers applications against their own criteria so if you’ve been turned by one it doesn’t mean you’ll be turned down by them all. Re-apply with a different mobile network but try and stagger your applications, requests for credit stay on your credit score and multiple requests can negatively affect your credit rating making it less likely that you’ll be accepted. 

Go for a SIM-only or Pay As You Go deal

You are more likely to be turned down for a contract with a phone than a SIM-only contract if you have a bad credit score. This is because of the additional value of the handset, the higher monthly repayments and the longer terms that come with a contract with a phone. SIM-only is a good way to build up your credit score as you make regular monthly payments and it also allows the network to get to know you as a customer, increasing your chances of being accepted for a deal with a phone in the future.

Pay As You Go contracts are flexible and you don’t need to pass any checks. However they are more expensive and don’t help to build your credit score in the same way as SIM-only as you pay up front for the services you use rather than being billed each month. Giffgaff also operate this way so if you want a SIM-only deal to help build up your credit score make sure you go for a rolling 30-day deal or a 12 month contract to see the benefits.

Choose a network that doesn’t use credit checks

The People’s Operator verify your name, address and bank account to prevent fraud but doesn’t use credit checks at all so you’re pretty much guaranteed to be accepted. Though their deals are only 30 days, they're the best choice if you want to build your credit score as you can register your bank or card details and let your plan roll on each month, just like a normal contract, and they offer some really affordable bundles including unlimited calls and texts and up to 3GB of data. Take a look at deals from The People's Operator to find out more.

Shebang guarantee you a mobile contract no matter what your credit history is like, and they even offer a small range of phone contracts with no credit check. They do offer a wide selection of deals though comparatively their prices are more expensive than the other networks.

You don't need a credit check for giffgaff's SIMs but you do need to pass a 'soft' credit check for a phone contract with the network. The pre-pay nature of giffgaff's Goodybags means they won't improve your credit score, but the flexible 30-day only tariffs make them ideal if you don't want to commit to a contract but dislike the high costs of pay as you go. Visit giffgaff's range of Goodybags and Gigbags.

What can I do if I need a phone contract?

If you want a phone with your contract then go for giffgaff. The network supplies phones using financing through RateSetter, a peer-to-peer loan company. Instead of full credit check RateSetter use soft credit checks that don’t investigate your financial history as deeply and more importantly don’t leave the same marks against your credit file. This means that even if you are turned down it won't have an adverse effect on any future credit applications. 

For more tips on improving your credit score visit the Money Advice service

Have you been turned down for a mobile phone contract before? Tell us about your experiences with credit checks in the comments section below.