Most cell phone plans are sold as part of a contract, in which the purchaser of the plan agrees to use the company's service for a set amount of time at a set price and, in return, the company agrees to provide a number of services. Canceling one of these may have several negative effects, but hurting your credit score is not one of them.
Features
Most cell phone plans last only a set amount amount of time, usually from six months to several years. At the end of this time, the customer can choose to renew the plan or choose a new plan. However, in most cases, the customer can choose to cancel the plan partway through. This is done by notifying the company. The cancellation may take effect immediately or at the end of the current billing cycle.
Effects
Canceling a plan has several effects. In most cases, a person who cancels a plan loses the right to the use of their current cell phone number. This means that the person must choose a new phone number from a selection provided by the company from which they purchase their new plan. Also, many companies charge a penalty for canceling a plan early, often as much as several hundred dollars.
Considerations
Canceling a plan has no effect on a person's credit score, as most companies have clauses in the cell phone contract that allow the person to cancel the contract. However, actively canceling a contract is not the same thing as failing to pay the amount owed the cell phone company, causing the cell phone company to terminate service. If a company terminates service over an unpaid bill, it may hurt your credit score.
Credit Score
According to the Fair Isaac Corporation, the inventors of the modern credit score, a person's credit score is composed of a number of factors. Among these is the person's credit history -- his record of paying back loans -- and the amount of debt he currently has outstanding. The more debt a person has out and the less consistently he repays loans, the lower his score will be. If a cell phone is forced to seek the payment of a debt from a customer, this will likely negatively affect the customer's score.
Misconceptions
While canceling a cell phone plan won't hurt your score, starting one up might ding it a bit. When a person has a credit check run against him, it temporarily lowers the person's score. Many cell phone companies run credit checks against customers before issuing phones.
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