Can I get a phone plan with bad credit?

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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.

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 will also need to sign a Credit Check Authorisation form, which 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.

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 it all checks out, it should be okay, 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
  • Optus
  • Vodafone

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 local calls & 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 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.

Vodafone Credit Checks

Vodafone says it is unable to provide any reason why your phone plan application would have been rejected. However, it does say that the credit report from its assessors may be able to help. 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 cheque of $100 or more that has been dishonoured more than once.
  • 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 12-month postpaid plans from Vodafone that may require a credit check.

Brand Features Max Data**/billing period Advertised Cost^^/billing period
Vodafone Logo

$30 Red SIM Only

  • Unlimited National Calls & SMS
  • 1GB Extra Data

min. cost $360 over 12 month plan period

2GBMax Data**/billing period $30Advertised Data^^/billing period More Details
Vodafone Logo

$40 Red SIM Only

  • Unlimited National Calls & SMS
  • 9GB Extra Data
  • Students get Double Data

min. cost $480 over 12 month plan period

6GBMax Data**/billing period $40Advertised Data^^/billing period More Details
Vodafone Logo

$50 Red SIM Only

  • Unlimited National Calls & SMS
  • 14GB Extra Data
  • 8,000 Qantas Frequent Flyer Points

min. cost $600 over 12 month plan period

16GBMax Data**/billing period $50Advertised Data^^/billing period More Details
Vodafone Logo

$60 Unlimited

  • Unlimited National Calls & SMS
  • 10,000 Qantas Frequent Flyer Points

min. cost $720 over 12 month plan period

40GBMax Data**/billing period $60Advertised Data^^/billing period More Details
Vodafone Logo

$80 Unlimited

  • Unlimited National Calls & SMS
  • 15,000 Qantas Frequent Flyer Points

min. cost $920 over 12 month plan period

70GBMax Data**/billing period $80Advertised Data^^/billing period More Details
Vodafone Logo

$100 Unlimited

  • Unlimited National Calls & SMS
  • 20,000 Qantas Frequent Flyer Points

min. cost $1200 over 12 month plan period

120GBMax Data**/billing period $100Advertised Data^^/billing period More Details
Vodafone Logo

$60 Red SIM Only

  • Unlimited National Calls & SMS
  • 10GB Extra Data
  • 10,000 Qantas Frequent Flyer Points

min. cost $720 over 12 month plan period

30GBMax Data**/billing period $60Advertised Data^^/billing period More Details
Vodafone Logo

$80 Red SIM Only

  • Unlimited National Calls & SMS
  • 15,000 Qantas Frequent Flyer Points
  • 20% Student Discount

min. cost $960 over 12 month plan period

60GBMax Data**/billing period $80Advertised Data^^/billing period More Details
Vodafone Logo

$100 Red SIM Only

  • Unlimited National Calls & SMS
  • 20,000 Qantas Frequent Flyer Points
  • 20% Student Discount

min. cost $1200 over 12 month plan period

100GBMax Data**/billing period $100Advertised Data^^/billing period More Details

Optus Credit Checks

Optus uses Equifax for its credit checks, and a black mark on your report can remain there for five years even if you’ve repaid the debt in full. Much like Vodafone, the credit check actually lies with Equifax and is much the same as other telcos:

  • Information on your application may be used.
  • Overdue payments past 60 days may be used.
  • Twice-dishonoured cheques of $100 or more may factor in.
  • 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. Below are some 12-month postpaid plans from Optus.

Brand Features Max Data**/billing period Advertised Cost^^/billing period
Optus Logo

$35 My Plan Plus

  • Unlimited National Calls & SMS

min. cost $420 over 12 month plan period

3GBMax Data**/billing period $35Advertised Data^^/billing period
Optus Logo

$45 My Plan Plus

  • Unlimited National Calls & SMS

min. cost $540 over 12 month plan period

15GBMax Data**/billing period $45Advertised Data^^/billing period
Optus Logo

$55 My Plan Plus

  • Unlimited National Calls & SMS

min. cost $660 over 12 month plan period

25GBMax Data**/billing period $55Advertised Data^^/billing period
Optus Logo

$65 My Plan Plus

  • Unlimited National Calls & SMS

min. cost $780 over 12 month plan period

40GBMax Data**/billing period $65Advertised Data^^/billing period

Telstra Credit Checks

Telstra uses Equifax 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 telcos, and has some of the country’s dearest and most comprehensive iPhone and smartphone plans. Below are some postpaid 12-month plans to sink your teeth into, that may require credit checks.

Brand Features Max Data**/billing period Advertised Cost^^/billing period
Telstra Logo

Small

  • $500 worth of calls & Unlimited SMS

min. cost $468 over 12 month plan period

2GBMax Data**/billing period $39Advertised Data^^/billing period
Telstra Logo

Mx*

  • Unlimited National Calls & SMS
  • 5GB Extra Data

min. cost $588 over 12 month plan period

10GBMax Data**/billing period $49Advertised Data^^/billing period
Telstra Logo

Medium

  • Unlimited National Calls & SMS
  • 10GB Extra Data

min. cost $708 over 12 month plan period

15GBMax Data**/billing period $59Advertised Data^^/billing period
Telstra Logo

Large

  • Unlimited National Calls & SMS
  • 20GB Extra Data
  • 12 Months Foxtel Now Subscription

min. cost $948 over 12 month plan period

20GBMax Data**/billing period $79Advertised Data^^/billing period
Telstra Logo

XL

  • Unlimited National Calls & SMS
  • 30GB Extra Data
  • 12 Months Foxtel Now Subscription

min. cost $1188 over 12 month plan period

30GBMax Data**/billing period $99Advertised Data^^/billing period

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 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 assessable forever – 7-10 years is usually the maximum credit reporting agencies can assess. Happy shopping!

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