Having a mobile phone is now a necessity for most people. We use them for communication, entertainment, and even work. A mobile phone contract allows you to have a cell phone plan with a set monthly fee, so that you can use your phone without having to worry about running up an expensive bill.
But, to get a mobile phone contract in Canada, you will need to have a good credit score. This is because the mobile phone company will be taking on a risk by lending you the money for the phone and service.
In Canada, there is no one-size-fits-all answer to the question of what credit score is needed for a mobile phone contract. The two major Canadian credit bureaus - TransUnion, Equifax - use different scoring models, which is why your credit score may differ from bureau to bureau.
That said, there are some general guidelines you can follow. If you've ever wondered what credit score is needed for a mobile phone contract in Canada, read on. As a trusted online lender in Canada, iCash is here to give you the information you need to make informed financial decisions - and that includes understanding the details about your credit score and getting a mobile phone contract.
What Kind of Credit Score Do You Need for a Mobile Phone Contract in Canada
The credit score you need for a mobile phone contract in Canada will depend on the specific mobile phone company and plan you're interested in. In general, the higher your credit score, the better your chances of being approved.
In most cases, a credit score of 600 or lower is considered poor. For most Canadian telecommunication companies, you will need a credit score of at least 650 to be approved for a mobile phone contract. If your credit score is below this, you may still be able to get a mobile phone contract, but you may have to pay a higher deposit or sign up for a prepaid plan.
A good credit score is generally considered to be a score of 700 or higher. If your credit score is in this range, you will likely be approved for a mobile phone contract with no problems. You may even be able to negotiate a lower monthly rate or get other perks, such as a free upgrade.
An excellent credit score is anything above 800. If your credit score is excellent, you're in the top tier of borrowers and you will be able to get the best mobile phone contract terms available.
Remember, these are just general guidelines - the specific credit score you need for a mobile phone contract may be higher or lower depending on the company you're applying with and what credit bureau the provider uses to check your score.
Why Mobile Phone Providers Check Your Credit
Your credit score is a number that represents your creditworthiness. It's used by lenders, landlords, and employers to evaluate your financial history and determine whether or not you're a good candidate for a loan, rental agreement, or job. Credit checks also protect customers from identity theft, which is a growing issue in Canada.
When you apply for a mobile phone contract, the provider will check your credit score to determine whether or not you're a good candidate for the agreement. They want to make sure that you're likely to make your monthly payments on time and in full. A high credit score indicates that you're a responsible borrower who is unlikely to default on your payments.
Telus, one of the major mobile phone providers in Canada, uses a credit score model from CreditVision provided by TransUnion when monitoring your credit for a mobile phone contract.
The company notes that these key factors can affect your score:
Payment history, such as late payments
Delinquencies and public records (e.g. bankruptcies, judgements, etc.)
Balance to limit ratio (owing too much)
Length and history of credit accounts (the longer the better)
Too many new accounts (opening accounts in a short period of time)
Other mobile phone providers, such as Rogers and Fido, use TransUnion to check applicants' credit scores. For these companies, a score of 650 or higher is generally considered good.
Some mobile phone providers, such as Bell, Virgin Mobile, and Koodo, use Equifax to check applicants' credit scores. For these companies, a score of 660 or higher is considered good.
How to Get a Mobile Phone Contract with Bad Credit
As mentioned, mobile phones are an essential part of life for many people in Canada. So, if you have bad credit, it may be worrisome about whether or not you’ll get approved. But, there are a few steps you can take to improve your chances.
Get a Prepaid Plan
A prepaid mobile phone plan does not require a credit check, so it's a good option if you have bad credit. With a prepaid plan, you pay for your service in advance and can only use as much data, minutes, and texts as you've paid for.
When you purchase a prepaid phone plan, you'll need to pay the full cost of the phone up front. However, there are often deals and discounts available, so it's worth shopping around. You could also purchase a used phone that can be used with a prepaid plan. And, since the law in Canada requires that all mobile devices must be unlocked, you can usually use any phone with any carrier, as long as it's compatible with the network.
Sign Up for a Family Plan
If you're having trouble getting approved for an individual mobile phone contract, you may have better luck signing up for a family plan. When you're part of a family plan, the primary account holder is responsible for making the monthly payments. This means that your credit score won't be as big of a factor in the decision.
Of course, you'll need to have a family member or close friend who is willing to add you to their plan. And, depending on the size of the family, the monthly cost of the plan could be quite high. But, if you need a mobile phone and can't get approved for an individual contract, a family plan may be your best option.
Find a Cosigner
Another option is to find someone with good credit who is willing to cosign your mobile phone contract. This person will be responsible for making the monthly payments if you default on the agreement. Many people will choose a parent or other family member as their cosigner.
Of course, this is a big responsibility for the cosigner, so you'll need to find someone who is willing and able to take on that burden. You should also be sure that you're able to make your monthly payments on time and in full, as defaulting on the contract will damage the cosigner's credit score.
Pay The Deposit
While it can be a large upfront cost, some mobile phone providers will allow you to pay a deposit to get a contract. The deposit is usually equal to one or two months of service, and it's refundable if you make all of your payments on time.
Paying a deposit is often the only way to get approved for a mobile phone contract if you have bad credit. However, it's important to make sure that you can afford the monthly payments in addition to the deposit. Otherwise, you may end up defaulting on your contract and losing your deposit.
Defaulting on your contract is also something that can burry you into a deeper financial hole. If you're struggling to make your monthly payments, it's important to reach out to your mobile phone provider as soon as possible. They may be able to work with you to create a payment plan or offer other options.
How a Phone Impacts Your Credit
Because mobile phone providers report your monthly bill payments to credit bureaus, having a phone can actually help you improve your credit score. As long as you make your payments on time and in full, you'll build up a positive payment history. This will help to offset any negative marks, such as late payments or defaults.
On the other hand, if you default on your mobile phone contract, it will damage your credit score. This can make it harder to get approved for future loans and lines of credit, and you may end up with a higher interest rate. Defaulting on your contract can also result in the loss of your phone and any money you've already paid.
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