Do You Need Good Credit to Open a Cell Phone Plan?

Good credit comes from a variety of factors, according to the My FICO credit score company website. The primary factor is making on-time payments, but many lenders and companies look at your account credit limits and balances and the length of time you have used credit. and installment loans. They also consider negatives, including charged off bills, repossessed cars and foreclosed homes, and use the data to make a decision.

Qualifications

Cell phone providers extend a service to you and expect monthly payments for your telephone use. They want reassurance that you are likely to pay on time. Pat Curry, a writer for the Bankrate website, explains that they judge this by reviewing your credit score, a number compiled from information in your credit bureau records. You are much more likely to get approved for a cell phone plan if you have a good score. A fair score may get you a contract if you put down a deposit, while a bad score means rejection.

Preparation

Prepare for your cell phone plan application by checking your credit reports beforehand. You are not legally entitled to see your credit score for free, but the Federal Trade Commission advises that you get free yearly credit reports on request because of a law called the Fair Credit Reporting Act. You must order them through a particular website (See Resources) because the Equifax, Experian and TransUnion credit bureaus charge a fee for orders made through their individual websites. Evaluate your reports for negative items that bring your credit score down, including many late payments, charged-off accounts or many high balances that are near your credit limits.

Solution

Some bad credit items cannot be resolved quickly, but you may find negative mistakes that need correcting. The FTC recommends disputing errors by writing letters to the credit bureaus. which forces them to check the information with the original creditors within 30 days. If the information is truly wrong, or if the creditors do not respond, the negative data is erased and no longer counts in your credit score. You may be able to raise your score enough to qualify for a cell phone plan if you find enough errors. Dayana Yochim, a Motley Fool website writer, advises that there are mistakes in about 80 percent of credit reports.

Alternatives

You can still get cell phone service without a good credit score. Mark Huffman of the Consumer Affairs website explains that pre-paid cell phones are purchased without a credit check. You buy airtime as needed, paying for it in advance. You cannot make or receive calls once you run out of minutes until you buy additional time.