Since the pandemic hit our streets, many of us have lost jobs, businesses, and others issued pay cuts. So, it’s not one but thousands of Americans who have now turned to buy now pay no credit check catalogues to cater for their most desires. And not just for online purchases as may think but also select in-store brands. In this article, we’re going to look at some tricks about the payment option, specifically how to get approved for a cell phone with bad credit.
But again, a good credit score is the second precious commodity if you need to foot the bill of your heart wishes. I mean, it’s either that or you have enough cash so that you can pay for whatever you want outright. Of course, there’s still the option to shop with a credit card, but buy now pay later, or simply BNPL services are/have taken over the credit line.
The 5 Main Benefits of Buy Now Pay Later Financing
The top reasons why the buy now pay later financing is replacing credit cards include:
Easier payment plans: BNPL spreads out the total cost of purchases into small, affordable charges.
More flexibility: the service has the option to choose the frequency you may want to use. That’s whether you should make the repayments weekly, bi-weekly, or on monthly basis.
Quick approval rate: With most of the leading BNPL programs, it only takes about three or five minutes to apply and 24-48 hours to get approved.
Gentle requirements: Unlike traditional credit cards or bank loans, this leasing facility requires few details to quality. In some like Afterpay, you can even apply with bad credit since they don’t run external credit
Low-Interest rate: Many bill me later stores and financial companies have as low as 10% APR and even others 0% APR if timely on repayments. Moreover, the service requires no contract or annual fees like those demanded by credit card companies.
How to Get Approved for a Cell Phone With Bad Credit
First of all, you should know that lease-to-own providers rely on your responsibility to be able to operate tomorrow. For this, many of them will still run a soft credit check to see if you’re responsible enough in managing your finances. The good thing is that this process has no impact on your credit score report as a hard credit check.
Furthermore, you can still qualify for a free mobile phone with bad or no credit at all. In this case, the provider will use other financial factors to determine that you can pay them back.
The common factors that can get you approved for a cell phone financing with a low or credit include:
- Stable income
- Consistent employment record
- Good phone bill payment record
- Good Amazon payments record
- A Co-Signer with good credit
- Placing a down payment
- Family cell phone plans
- Use of International Credit History
What Do BNPL and Cell Phone Companies Consider Bad Credit
In simple words, Investopedia defines “bad credit” as a person’s or company’s history of failing to pay bills on time. The information on the bills owed or not paid on time is used by the major credit bureaus to compute a credit score that will justify your creditworthiness.
However, various countries have different credit score formats, with the FICO score (named after Fair Isaac Corporation) used here in the U.S. The score usually ranges from 300 to 850, whereby the highest is the perfect mark, then the lowest the least.
Nonetheless, under 600- or otherwise 580 scores are in the VERY POOR range, which it’s what we call bad credit. Statistically, only about 16% of Americans are at bad credit margin, while up to 67% have a good FICO score or better.
Here’s a data chart showing the consumers FICO scores as per by Experian PLC, one of the major credit bureaus in the United States.
|FICO Score||Credit Range||Risk Level Average||Consumers %|
|800 – 850 Exceptional|
(well above average)
|740 – 799||Very Good|
|300 – 579||Very Poor/ Bad|
(well below average)
|670 – 739||Good|
(slightly above average)
|580 – 669||Fair|
(slightly below average)
At a FICO score between 670-850, a lot of lenders will find it okay to do business with you and at lower interest rates.
You’ll also enjoy good rates and access to relatively many borrowers if you have a fair credit range, between 580 and 669 scores. According to the credit report, you’re less risky to lend to than bad credit scores.
Meanwhile, many lenders, in particular banks and credit card companies are wary about doing business with borrowers within the bad credit margin. They fear that the majority of such consumers are likely to neglect their debt payment, with more than 90 days past due, in the future.
But again, this isn’t the end and doesn’t mean that you should give up on that smartphone gift you wanted for your BFF. More than dozen of providers, mobile carriers or buy now pay later companies, are out there and ready to give you a second chance.
Quick Summary: The 8 Ways To Get Approved For A Cell Phone With Bad Credit
Stable Income Level
Despite promising free cell phones with no credit check, BNPL and financing companies still have to determine your ability to repay them. Also, they will need to decide on the gadget or amount to approve for you. So, they may ask (not always) you to enter more info about your finances, which in most times is the income. No, don’t worry. The majority of lenders require a minimum annual income ranging between $12,000 to $20,000.
Consistent Employment Record
Even if your income level is well above the minimum, the leasing company you’re dealing with still needs to make sure the income flow is steady. So, they’ll also ask how long you’ve been with your current employer. If we can use Luthersales.com as an example, the luxury store asks for a minimum of three months but others ask up to six months.
Good Amazon Payments Record
This one only applies to Amazon monthly payments plan, whereby you can take home select phone modes, then pay up later in installments. The program runs no credit check, which means you can apply, regardless of the credit score. However, you must have an Amazon account that has been active for at least one year and good payment history on past purchases.
Good Phone Bill Payment Record
Just like with a retailer like Amazon, some carriers will rely on your phone bill payment history before approving your financing application. A good example is Boost Mobile, whereby you can apply with bad credit for even the latest smartphone deals like iPhone 12 Pro Max. However, the company requires that you have paid on time for the last 12 consecutive monthly payments or else enroll Premier Grace Period program
Get A Co-Signer
A co-signer involves looking for a person with a favorable credit score to act as a guarantor. The BNPL company or carrier will lease you the cell phone under his/ her name, such that he/ she is reasonable when you don’t pay on time. The good thing is that you can transfers the account from the co-signer to your name later on after building the FICO score. And since the account has been active, you’ll just continue making payments without even placing a deposit.
Pay A Down Payment
As was mentioned, not many lenders will be willing to invest in you if the FICO score is less than the minimum, below 580. However, you can convince the lender, in our case carrier or buy now pay later company, by placing a deposit. Not only will it act as the security fee but also help lower the monthly repayment charges or period.
Consider Family Cell Phone Plans
If you’re buying your cell phone through the carrier financing programs, you can consider the family plan. It only needs the primary account holder to have good credit. Then, the rest (up to nine people depending on the company) won’t have to pass a check. It’s more like with the Co-signer option, only that the family cell phone plans also have the beauty of cheaper monthly charges.
Use International Credit History
This method can also come in handy if you have recently moved to the U.S. but need to lease a cell phone. It allows you to transfer your “foreign” credit report to the U.S. before you can achieve your American credit score to show. A good example we can say here is the California-based Nova Credit Inc., albeit it primarily deals on credit cards.
Can Cell Phone Plan Improve my Bad Credit?
Having bad credit or even a blank score on the report can curtail your chance to get funds from creditors like banks, credit unions, and mortgage companies. The same applies if you have what creditors and lenders call a thin credit file- when a consumer has only a few (one to four) credit accounts on the credit reports.
While many will assume that they’re on the right margin, blank and a thin credit file also falls in the group of credit risk. This is so as there’s no much information on your reports to influence the lenders and creditors that you’re responsible. In other words, you’re a mystery borrower, which leaves the lenders confused about whether to deny or approve of you.
Anyway, back to the main question, phone companies usually don’t report your payments to the credit bureaus. But again, credit scores like FICO Score comprise all the financial information computed from the bureau’s report. So, it’ll be kind of impossible to build your history when relying directly on cell phone bills.
However, this isn’t to say you still can’t improve your poor credit score. There are two methods you can use to grow your bad credit using Cell Phone payments:
1. Register with Experian Boost:
Experian Boost is a special feature that enables you to add your bills of phones, streaming services, and utilities like water to your credit report. Hence, improving your credit score with all on-time payments. It’s completely free to use and also doesn’t connect late payments.
Please note, the phone company may send your default debt to the collection agency if it goes to extreme delinquent. The collection agency will then report to the bureau, and that will now reflect and impact your credit report.
2. Financing with a credit card
Credit card companies are amongst the major creditors and whose information is used to prepare credit reports. Therefore, you can also improve your FICO score by linking your phone payments as well as other services and utilities to the card. That’s the phone company will deduct its bill from your credit card account, then you clear the card’s balance in full before the due date. The best part, you’ll also earn credit card points, cashback, amongst other rewards.
Alternative: Involve credit repair companies
This is also another way that can help improve your low credit score. However, it should be a last resort as it could be expensive to run and sometimes ineffective. The method involves hiring a third-party firm, which will communicate your payment activity to the credit bureaus on your behalf. In most cases, this will be tracking any inaccurate information and having it removed from your credit report before it spoils your FICO score.
In general, the best way to get approved for a cell phone without a deposit is when you have a good credit score. If you have bad credit, you can still get your desired device from various providers based on your other financial information. A stable income is the easiest pass of all as it shows the lenders that you can repay them on time and consistently.
However, placing a deposit can help prove your seriousness on the matter while still reducing your monthly charges. This includes even those lease-to-own firms that claim doesn’t require a down payment.
To conclude, don’t forget improving your bad or poor credit is still crucial. So, do check out Experian Boost or link your cell phone payment to your credit account, and make sure you pay off your balance on time.