How You Can Get A Mobile Phone Contract With Bad Credit History

Getting accepted for a Mobile Phone Contract with a major network

These days, companies offering mobile phones on contract will run a credit check on the individual who is applying for the mobile phone contract. This has been the case for quite some time as there is a certain degree of risk involved for the mobile phone dealer and network alike before they can give this type of plan.

To give more detail, a Mobile Phone Contract plan is just like any other finance, in the sense that the mobile phone dealer (shop) will buy the phone handset at a cost price, (this can be quite high in some cases) and then give it to you for free expecting to make the money back plus more (profit).

Let's take the Apple iPhone 4 for pure example...

An Apple iPhone's "stand-alone" price is say approximately ?599 (stand-alone offline cost of the product). Now in order for the mobile phone network to pay the commission to the dealer for selling the phone and bringing the customer on to the network, they will first need to offer a tariff plan that will make them money in the long run.

Example

The Apple iPhone is generally given FREE on plans costing ?45 per month and on a 24 month contract. This means, the network will make 24 x ?45 = ?1080 back from that customer over the 2 years and that's not taking other charges into consideration (sometimes, customers will go out of their allocated call allowances and incur further charges which will be added to the monthly cots for the plan, such as International Calls for example). This example also means that the network will not break even until the fourteenth month from the customer paying just the monthly ?45 (?45 x 14 = ?630).

This is exactly why they need to ensure that they are offering a "Mobile Phone Contract" only to those who are less at risk of not paying the money back and actually customers that are more likely to complete the contract term. To ensure this happens, a credit score is used (as in the same instances for loans and other finance applications, etc).

The credit score assesses the customer's credit rating and determines whether they are good for the plan or not. This is why most people with a lower credit rating fail.

Also, another factor to take into consideration is that trying for a Mobile Phone Contract via a Mobile Phone Dealer (High Street Shop) such as The Carphone Warehouse or Phones 4u, can have further implications as their credit score is somewhat more stringent as they also have to protect their own interest for the sale of the handset (their stock which costs them) and only accept customers who meet a certain criteria. This is to ensure that they get paid their commission for getting the customer subscribe to a network (the network pays a commission for each customer that is brought onto their network).

Tips You Can Follow To Improve Your Chances For Acceptance

The tips can be broken down as follows and these have worked and helped many to get accepted!

Tip 1 - Apply With The Mobile Phone Network Directly

As mentioned above, going via a high street mobile phone dealer can be a very difficulty route in being accepted as they have their own criteria and so do the network, so it's like a double barrier. Going direct to the network reduces the risk as the network will be the only one assessing the risk and they will not be obliged to pay a commission to the dealer either which naturally increase their bottom line.

Tip 2 - Apply For A Low End Handset On A Low-End Monthly Tariff

Very, very good tip indeed and this has helped many in getting accepted. As mentioned above, like in any other type of loan, the more you borrow, the more likely you are to be rejected as there is more risk of the creditor not getting their money back. Going for a high-end handset such as the Apple iPhone 4 on a ?45 per month tariff will most likely see you rejected - simple. The idea is to go for a low-end handset on a low end monthly plan, something an average handset on a ?20-?25 per month plan. This reduces the risk dramatically as the phone may only the network ?150 and they will can easily recover this cost within as little as 6 months:

?25 x 6 = ?150

and they can be in profit after month sixth guaranteed, or even before if you are incurring call charges (as described above, which is significantly quicker than fourteen months given in the iPhone example)

Saying this, there are many great handset choices on a ?25 per month plan, you will be surprised at the quality of handset that is available on this level.

Tip 3 - Apply For A Sim Only Contract

Another idea that has helped hundreds of people has been the introduction of "Sim-Only" deals. These are deals where the customer only chooses to get connected to the network via the purchase of a Sim Card only (no handset included). Sim card tariffs are packed with far greater value than contract deals with mobile phones as there is literally zero risk from the networks end as there is no subsidy required for the cost of a handset. This allows the network to offer the customer to receive more minutes and more texts and data allowances as they have no "upfront cost" for a handset to recover and can therefore pass on the savings to you. Another reason being that the network is in profit from day one into the contract. An additional advantage of "Sim Only" contracts is the fact that most of them come with a 30 days rolling contract which means that there is even more flexibility as you are not tied into a 18 or 24 month contract.

Conclusion

Following the three tips shown above will definitely increase your chances for approval ten fold. These same tips have helped hundreds if not thousands of consumers get onto a mobile phone contract and away from expensive pay-as-you-go tariffs and even get onto using a brand new smart phone as opposed to a basic phone with basic functionality.