Getting Cell Phone Financing with Bad Credit

Having a smartphone isn’t just about convenience these days. While it’s not necessary to pay top dollar every time a new phone model hits store shelves, for most people owning at least a semi-current smartphone is essential.

Whether you use a cell phone for work or school communication, digital banking, or to stay connected with loved ones, smartphone technology plays a key role in daily life. But if you have bad credit, financing a cell phone or even securing mobile phone service can become much more complicated.

Thankfully, even if you have less-than-perfect credit there are still options when it comes to cell phone financing. The guide below breaks down what you need to know about getting cell phone financing with bad credit, what providers are looking for when they check your credit, and how your cell phone bill could help you build credit over time.

Why getting a cell phone could depend on your credit

When you apply for a new cell phone service, especially a plan that includes a financed mobile device, your credit information often plays a role in determining whether you’re approved.^[1] Cell phone companies often use credit checks to review your risk as a potential customer. A high credit score tells providers that you’re more likely to make your payments on time. But a lower credit score can indicate that you’re a higher risk customer.^[2]

If you have credit challenges (e.g., late payments, collections, or other negative marks), a cell phone provider might require a security deposit when you finance a device or establish new service. In other cases, bad credit might cause a wireless carrier to offer you less attractive terms, limit your financing options, or recommend alternative wireless service options instead. That’s why it’s important to understand where your credit stands and explore other options if you think your current credit situation might hold you back.

How cell phone financing works

Cell phone financing lets you spread out the cost of a new wireless device over time instead of paying full price upfront. And since many new cell phone models top $1,000, it’s understandable that consumers may want to break down the cost of those purchases over multiple payments.^[3]

Many people finance phones through sources such as:

• Major wireless carriers like AT&T, Verizon, and T-Mobile
• Device manufacturers like Apple or Samsung
• Retailers such as Best Buy or Walmart

With traditional carrier financing, you’ll typically choose a phone and agree to a monthly payment plan—typically between 24 to 36 months. These plans are often interest-free, which is a big plus if you qualify. But if you want to leave the plan early and switch to another wireless carrier, you’ll likely have to pay off the remaining device balance first.^[4]

Some financing agreements treat the phone as collateral. If you fall behind on your payments, your wireless provider might suspend your services and your remaining device balance could be due in full.^[5] That’s why it’s important to understand your contract terms before signing any agreements.

There are other options when it comes to cell phone financing as well. Certain retailers may offer financing through Buy Now, Pay Later (BNPL) lenders like Klarna, Affirm, or Afterpay. But be sure to check interest rates before committing since APRs could be as high as 36% in some cases.^[6]

Some people may also opt to finance the purchase of a cell phone with a credit card (preferably with an introductory 0% APR offer). But credit card financing could increase your credit utilization ratio and hurt your credit score until you pay off the debt. With any financing option, be careful to consider the pros and cons before you move forward.

What do cell phone companies look for in a credit check?

When you apply for new wireless service with cell phone financing, it’s common for cell phone companies to perform credit checks as part of their vetting process for new customers.^[7] Even as an existing customer, a cell phone company might want to run a credit check if you’re on a postpaid cell phone plan and want to upgrade your mobile device (with financing).

As far as approval criteria is concerned, every company is different. There’s no standard minimum credit score you need to qualify for a cell phone contract. Yet, in general, wireless carriers may consider the following types of details when evaluating your eligibility for financing and service.

• Credit score (the higher, the better)
• Payment history
• Negative credit history (e.g., collection accounts, etc.)
• Length of credit history
• Current debt obligations and outstanding balances^[8]

If your credit reflects risky financial behavior or limited history, the provider might ask for a deposit. In other cases, it could recommend a prepaid or no-contract cell phone plan instead.

Wireless providers may also use credit scoring models that are different from traditional credit scores, known as telecom credit scores. These scores place a stronger emphasis on data from telecommunications companies (e.g., mobile phone companies, energy, and cable providers). They also have a different numerical range of 400 to 900 instead of the traditional credit score range 300 to 850.^[9]

What is considered bad credit to a cell phone company?

Most major cell phone providers don’t publish exact credit score requirements. But in general, wireless carriers (and lenders) consider a credit score of 580 or below to be “poor” or “bad” credit.

Below is a closer look at general credit score ranges so you can get a better idea of where you stand.

Source: myFICO^[10]

Cell phone companies may also look for other credit-related red flags including:

• Past-due accounts
• Recent late payments
• Bankruptcies or charge offs
• High balances relative to credit limits
• Limited credit history (aka a “thin credit file”)

Keep in mind, even if you don’t meet traditional credit requirements to finance a cell phone, you can still explore other options like those below.

Can you get a cell phone with bad credit?

Thankfully, it’s still possible to get a cell phone even if you have bad credit. Your options might be different from someone with excellent credit, but there are still plenty of alternatives to traditional cell phone financing to consider.

1. Prepaid cell phone plans

Prepaid phone plans are available from many major mobile phone carriers and mobile virtual network operators (MVNOs). These types of phone plans don’t typically require credit checks because you pay for service in advance every month. But you will need to buy your mobile device upfront and out of pocket.

Below are examples of companies that offer prepaid phone plans.

• Verizon Prepaid
• AT&T Prepaid
• Connect by T-Mobile
• Mint Mobile
• Straight Talk Wireless
• TextNow
• Boost Mobile

On the negative side, prepaid plans may receive deprioritization compared to traditional postpaid cell phone customers. That means during high traffic times when a cellular network is busy, the wireless carrier might slow down your data speeds to help manage network congestion.^[6]

If you’re considering a prepaid plan, keep in mind that a used or refurbished phone could save you money as well. Retailers like Amazon Renewed, Back Market, Best Buy, and others sell refurbished mobile phones with warranties.

2. Pay a security deposit

Depending on the condition on your credit, you might be eligible for cell phone financing or wireless service if you’re willing to pay a deposit. Deposit requirements can vary based on your credit score and different wireless carrier requirements.

Some deposits may be refundable after a period of time—provided you don’t miss any payments.^[11] Other wireless providers may hold onto your deposit as collateral until the future disconnection of your service (with no outstanding balance). Be sure to ask questions and read the fine print of any security deposit agreement and make sure you’re comfortable with the terms before moving forward with this option.

3. Join a family plan

Several major wireless carriers offer multi-line family plans that let you share data and possibly save money on services at the same time. With these cell phone plans, the main account holder will need to pass a credit check when establishing service. Yet additional line holders typically don’t have to undergo additional credit checks of their own since they’re not financially responsible for the bill.

However, it’s important to understand the risk that the primary account holder is taking in this situation. He or she is on the hook for the entire bill if something goes wrong. If anyone fails to pay their share of the bill on time or decides to leave the contract early without paying their termination fee(s), it could cost the primary account holder money, hurt their credit, and possibly even damage the relationship.

Does financing a cell phone impact your credit score?

Financing a cell phone does have the ability to impact your credit score in a few ways. But whether or not your credit score is affected depends on a few different factors.

Below are a few scenarios where your credit score might change based on cell phone financing.

• Credit check: When you apply for new wireless service (postpaid) or cell phone financing, the provider or lender may check your credit report. If the credit check is a hard credit inquiry, you might see a temporary drop in your credit score. In most situations, a new hard credit inquiry triggers a FICO Score decline of less than five points.^[12] But every credit situation is different.
• On-time payments: If you finance your cell phone with a lender or credit card company, on-time payment history might help you build positive credit. In general, loans and credit cards appear on your credit reports with one or more of the major credit bureaus—Equifax, TransUnion, or Experian.
• Late and missed payments: Of course, if you don’t make your payments as promised, there’s a chance cell phone financing could damage your credit as well. Any late payments or collection accounts that appear on your credit report could have a negative impact on your credit score, and might continue to do so for up to seven years.^[13]

It is important to note that not all cell phone financing plans appear on credit reports. Wireless phone carriers, for example, often don’t report cell phone account information to the major credit bureaus.^[14] (But they may turn defaulted debts over to collection agencies if you don’t pay your bill and those negative items could show up on your credit reports as collection accounts later.) If a cell phone company doesn’t report an account to the credit bureaus, the account won’t affect your credit history or credit score.

How to build credit with your cell phone bill

In most cases, your regular monthly phone bill won’t appear on your credit report unless it goes unpaid and ends up in collections. Since credit scoring models only consider data from your credit reports, that means paying your cell phone bill on time usually won’t help your score—unless you take proactive steps to change that.

One option is to use a free tool like Self's Rent and Bills Reporting. This service allows you to link your bank accounts, find the rent and phone payments you want to build credit with, and Self will report those payments to TransUnion. Rent reporting also reports your monthly payments to Experian and Equifax. The service lets you report up to five eligible accounts per month (rent, cell phone, electricity, gas, etc.).

To take it a step further, you have the option to opt into Lookback. This added feature lets you report up to two years of past cell phone, rent, and utility bill history to your credit report for a one-time fee of $49.95.^[15] This retroactive feature could potentially add a meaningful amount of credit history to your report—especially if you’ve consistently paid your bills on time.

Tips for improving your approval odds

Whether you’re applying for new cell phone financing or you just want to build good credit for the future, the following tips could help you.

• Check your three credit reports. You can download your credit reports once a week at AnnualCreditReport.com.^[16] If you discover any errors, dispute them with Equifax, TransUnion, or Experian.
• Reduce credit card debt. Not only is high-interest credit card debt expensive, it can hurt your credit score even if you pay your bill on time every month.
• Pay credit obligations on time. Payment history is the most important factor in the calculation of your credit score.^[17]
• Establish credit strategically. If you have little to no credit, consider opening a credit builder loan, secured card, or other accounts to build credit.

Bottom line

You don’t need perfect credit to get a smartphone. But having bad credit could limit your options or make it so you have to pay an upfront deposit. Fortunately, there are still plenty of ways to get the device and service you need even if your credit needs improvement.

Prepaid phone plans, family plans, and deposit-based alternatives offer alternatives to traditional postpaid contracts. And if you do decide to finance your device, make sure you understand the terms and any potential costs involved.

Finally, don’t forget that your phone bill can be more than just a monthly expense. With the right tools, you can use those regular monthly payments to your advantage and build credit that could help open doors in the future.

Sources

1. TransUnion.com. “Why getting a cellphone may depend on your credit.” https://www.transunion.com/article/why-getting-a-cell-phone-may-depend-on-your-credit
2. Experian.com. “Credit Score Basics: Everything You Need to Know.” https://www.experian.com/blogs/ask-experian/credit-education/score-basics/understanding-credit-scores/
3. TomsGuide.com. “Best phones 2025 tested — Out top picks.” https://www.tomsguide.com/best-picks/best-phones
4. Experian.com. “Can Financing a Cellphone Help You Build Credit?” https://www.experian.com/blogs/ask-experian/can-financing-a-cellphone-help-you-build-credit/
5. ATT.com. “Learn about smartphone installment plans.” https://www.att.com/support/article/wireless/KM1106686/
6. NerdWallet.com. “Skip the Credit Check With a Prepaid Cell Phone Plan.” https://www.nerdwallet.com/article/finance/get-cell-phone-plan-no-credit-check
7. Verizon.com. “Checking your credit is the first step in joining Verizon.” https://www.verizon.com/solutions-and-services/credit-check/
8. CapitalOne.com. “Cell phone credit checks.” https://www.capitalone.com/creditwise/life-events/cell-phone-shopping/
9. Kiplinger.com. “Why Your Credit Score May Drop When You Shop for a New Phone Plan.” https://www.kiplinger.com/article/credit/t017-c050-s003-why-your-credit-score-drops-when-shop-new-phone.html
10. myFICO.com. “What Is a Credit Score?” https://www.myfico.com/credit-education/credit-scores
11. t-mobile.com. “Adjustments & refunds.” https://www.t-mobile.com/support/account/adjustments-and-refunds
12. myFICO.com. “What Are Credit Inquiries and How Do They Affect Your FICO® Score?” https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries
13. ConsumerFinance.gov. “How long does negative information remain on my credit report?” https://www.consumerfinance.gov/ask-cfpb/how-long-does-negative-information-remain-on-my-credit-report-en-323/
14. Experian.com. “Can Cellphone Bills Help Build Credit?” https://www.experian.com/blogs/ask-experian/how-can-cell-phone-bills-help-build-credit/
15. Learn.Self.inc. “Raise your credit like your landlord raises rent.” https://learn.self.inc/lpg/mpa/rent-bills-landing/
16. AnnualCreditReport.com. “The only source for your free credit reports. Authorized by Federal law.” https://www.annualcreditreport.com/index.action
17. myFICO.com. “What’s In My FICO® Scores?” https://www.myfico.com/credit-education/whats-in-your-credit-score

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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