Will a Cell Phone Plan Affect My Credit Score?

Your cell phone plan does not generally affect your credit score because it is not a loan or revolving account like a credit card. You enter into a contract and make monthly payments for a service, just as you would for utilities like gas and electric. This information does not show up on your credit reports as long as you pay on time, but you score could be affected if your account goes delinquent.

Reporting

Items only affect your credit score if they show up in your credit reports, since your score is based on your report data. Cell phone plans are considered as "alternative credit data," according to Bankrate columnist Steve Bucci, because they only get reported to the Experian, Equifax and TransUnion credit bureaus if your account goes past due. Cell phone providers turn delinquent bills over to collection agencies, which add the accounts to the customers' credit reports if they still refuse to pay.

Effect

A past-due cell phone bill that goes to a collection agency is a serious blemish on your credit score. The most important category in credit score formulas in your payment history, according to the Fair Isaac scoring company, because more than a third of your score is based on promptness of bill payment. Collection agency accounts are part of this category and pull down your score because they represent a seriously past-due obligation. The cell phone bill's exact effect depends on whether it is your only negative credit report item or whether you have many delinquent bills. But can cause difficulties in getting new credit. The past-due account remains in your records for seven years.

Remedy

You can remove your delinquent cell phone account's credit score effects by getting the collection agency to erase it from your Experian, Equifax and TransUnion records. A debt collector's main goal is to get payment from you, not to ruin your credit score, so you have some leverage if you can pay the bill in full or make a lump sum settlement agreement. Offer the payment in exchange for removal of the collection account from your three credit reports, and ask for written confirmation of the deal if the debt collector agrees.

Considerations

Your cell phone plan can affect your credit score, and your score also affects your ability to enter into a new cell phone contract. Cell phone service providers pull your credit reports to check your payment history on other accounts. Late payments, charge-offs and other negatives might keep you from getting a cell phone plan or force you to pay higher rates or put up a deposit, according to Erin Burt of "Kiplinger's."