article background

Can I get a phone plan with bad credit?

You probably know that your credit score can affect your applications to home loans, personal loans, car finance and other hefty money decisions, but did you know it can also affect your ability to get a phone plan? That’s right, many postpaid plans require some form of credit check in the sign-up process; more expensive phones and phone plans may be even more stringent. If you know you have a bad credit score and you’re looking for a new phone plan, here’s what you can do.

Prepaid phone plan offers you might like

The following table shows a selection of sponsored SIM Only plans on Canstar Blue’s database with links to referral partners.

What do phone providers look for in credit checks?

Telcos will likely send your personal details to a credit checking agency to judge your suitability for the plan you want to sign up to. Basically, they want to know if you can afford the ongoing payments or not.

Unfortunately, there is no way to know what each telco will and won’t allow for with regards to credit checks. Below is a list of some of the questions your telco could ask in the sign-up process:

  • Your current address and how many years you’ve been at it.
  • Your occupation and the company you work for, and how long you’ve worked there.
  • 100 points of ID: The last four numbers of your credit card may be used in a credit check. Your licence or other ID may also be needed.

In all likelihood, you’ll also need to sign a Credit Check Authorisation form, which basically allows the sales representative of the telco to submit the credit check. However, this can all vary on a telco-to-telco basis, as well as what phone contract you are purchasing; if in doubt, enquire with your provider.

You can check your credit score for free here

Phone plans without credit checks

Going on a month-to-month postpaid or a prepaid phone plan is an easy way to avoid credit checks and you can even pick up a SIM card in grocery stores. Of course, you won’t be able to pick up a new device on a plan as this usually requires a contract.

Here is a selection of postpaid plans from Canstar Blue’s database with a minimum of 10GB of data, listed in order of standard cost, lowest to highest, then by data allowance, largest to smallest. Use our comparison tool to see a range of plans from other providers. This table includes products with links to referral partners.

What’s stopping me from getting a phone plan?

The only real road block to a denial in your application for a phone plan is a red flag in your credit assessment from providers such as Equifax, Experian or Dun & Bradstreet. These companies then forward on their findings to the telco you’re applying with. These assessors will look at:

  • Consumer credit applications
  • Overdue accounts (separated into three categories including ‘Outstanding’, ‘Finalised’, and ‘Arrears up to date’).
  • Bankruptcy information

If these don’t make sense to you, ask yourself if all your bills have been paid, your home loan is in-check, you have no outstanding fines, such as speeding or parking violations and that you haven’t defaulted on any loans. Also make sure you don’t own a business that is in-debt to other companies – you haven’t declared bankruptcy and so on.

  • Telcos look at your credit history up to the last 10 years, so if you were a blasé 20-something with some overdue parking fines or you defaulted on a loan, this could be the culprit.

If everything checks out, it should be OK, but mistakes can cost you; the assessors mentioned above can also provide a free credit report up to once a year. So, if you’re rejected, it could pay to look at your report to see if anything is awry.

Which telcos do credit checks?

Given that credit checks are likely to be carried for customers looking to sign up to a postpaid phone contract – be it over 12, 24, or 36 months – the following telcos are likely to do credit checks:

  • Telstra
  • Vodafone
  • Optus

Other smaller carriers that offer contracted phone plans may also conduct credit checks. These may include Southern Phone, Woolworths Mobile, TeleChoice and Dodo.

Phone plans for bad credit

Arguably the most glaringly obvious way to circumvent credit checks is to choose a prepaid phone plan. What has historically been the ugly stepsister in the phone plan world, prepaid plans now offer big data allowances as well as unlimited standard national calls and texts. There’s also no need to ask for a $10 recharge at the supermarket anymore; you can auto-renew online. This way, your prepaid plan can operate similar to any other type.

Prepaid plans avoid credit checks due to having to make payment before you receive your credit. In lieu of this, there are no excess data charges as once your credit runs out, that’s it. You can manually top up, however. Below are some competitive prepaid providers that may be worthy of consideration if you’ve failed a credit check.

Telstra credit checks

Telstra uses the credit reporting bodies Equifax, Illion and Experian for its credit checks. There’s no exact hard and faster answer as to why your application would have been rejected. A check with Equifax’s credit report may shine some light, however. Information used may be:

  • Application info provided by you.
  • Overdue payments past 60 days.
  • Dishonoured cheques of $100 or dearer.
  • Serious credit infringements.
  • Overdue payments advices.

Telstra is Australia’s largest telco and has some of the country’s dearest and most comprehensive iPhone and smartphone plans. Below are some postpaid plans to sink your teeth into, that may require credit checks.

The following table includes all month-to-month SIM-only Telstra plans as published on Canstar Blue’s database listed in order of standard cost, lowest to highest. Use our comparison tool to see a wider range of plans from other providers. These are products with links to referral partners.

Optus credit checks

Optus like Telstra, uses Equifax and Illion for its credit checks, and a black mark on your report can remain there for years even if you’ve repaid the debt in full. Much like the other telcos, a credit check may look into:

  • Information on your application may be used
  • Overdue payments past 60 days may be used
  • Any serious credit infringement
  • Advice that payments are no longer overdue

The exact methodology Optus uses and reasons for rejection aren’t easily obtainable. Nevertheless, it can be assumed that expensive phone plans may require a more stringent credit check. The following table includes Optus’s postpaid SIM-only plans as published on Canstar Blue’s database listed in order of standard cost, lowest to highest. These are products with links to referral partners.

Vodafone credit checks

Vodafone also uses Equifax, as well as Illion for its credit checks. Vodafone may submit the following information to credit assessors as part of the application process:

  • Information submitted in your application
  • Payments more than 60 days overdue and are in collections
  • Any serious credit infringement committed by you
  • Advice that payments are no longer overdue

Though there is no publicly-available methodology, it can be assumed that the dearer the phone plan, the more stringent the credit checks will be. Below are some month-to-month postpaid plans from Vodafone that may require a credit check.

The following table includes all postpaid SIM-only Vodafone plans as published on Canstar Blue’s database listed in order of standard cost, lowest to highest, then data allowance, largest to smallest. Use our phone plan comparison tool to see a wider range of plans from other providers. These are products with links to referral partners.

The final word on bad credit and phone plans

Unfortunately, there’s no real way to know if you’ll be rejected for a phone plan until you actually apply for one. However, it doesn’t hurt to look at your own credit report; it’s often free if you look at it once a year. If you have been knocked back, it can be infuriating, especially if you know someone who seems unreliable with money able to get a phone plan no worries.

Luckily, credit reports can shine a light into why you’ve been rejected; unfortunately, you may have to go through the credit reporting agency and not the telco to get this information. A way to get a phone plan and avoid credit checks is to buy a prepaid plan. They often operate similarly to postpaid plans, and many include the same amount of value.

If you’ve been knocked back for a phone plan, it can be disheartening but there’s no need to panic. There are still options, such as a cheaper phone plan or a prepaid phone plan that can equip you with the latest deals. Fortunately, if you’ve had a brush with bad credit in the past, it won’t be hang around forever – 7-10 years is usually the maximum credit reporting agencies can assess.

Share this article