These days your credit score can be used as basis for qualifying for just about any financial product - insurance, loans, subscriptions and even cell phone contracts. Generally, people who have low credit scores may find it difficult to get approved for a cell phone contract and therefore just settle with prepaid mobile phones. However, many networks now offer bad credit cell phone contracts to reach out to the low credit score market.
What bad credit cell phone plans are we talking about?
Plans for bad credit cell phones come in two types: prepaid and postpaid (billing). Prepaid plans are those which the customer can use only when he or she has funds deposited in the account. Most people find this more cost-effective since they pretty have total control over their mobile expenditures.
For postpaid plans, you are usually given a set amount of call minutes to consume in a given month. Oftentimes, you are given unlimited mobile access for a certain monthly fee. People prefer these plans because of their convenience and for some of the perks and benefits they offer.
What do I need to get a cell phone with bad credit?
A few documents may be required from you such as proof of income, bank statements and proof of billing. Most providers require the applicants to be above 18 years old with a stable source of income. The requirements vary across different providers but they will all demand a downpayment or deposit from the applicant or subscriber. On average this ranges from $200 to $500 or whatever the monthly fee is for the plan. Some providers require that you pay for two months ahead. Bear in mind that the amount you are required to pay in advance will depend on your credit score and your monthly income. Usually, the lower your credit score, the higher your downpayment.
If you do not wish to pay upfront deposits, some providers are willing to forego that in exchange for more fees and added penalties. This will raise the overall cost of your contract and may not be a very good idea if you're trying to repair your credit score. Some providers will increase your monthly interest rate should you fail to pay your dues on time. For instance, if you miss this month's payment, you may be asked to pay double the next few months. This may not be a smart way to get cell phones for people with bad credit.
It is much more sensible for a person with low credit score to get a prepaid mobile phone plan instead of a postpaid or fixed contract. Prepaid cell phone contracts make it easier for you to manage your expenses and leverage your credit score. After all, if you fail to deposit funds, you only lose certain aspects of the service; not the phone itself. In most cases, even if you don't top up your prepaid account, you'll still be able to receive calls and text messages (but not initiate or send them).
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