Credit Building Tips

How to Get a Cell Phone With Bad Credit (And Low or No Deposit)

Shaun Connell
May 25, 2023

According to the Pew Research Center, the vast majority of Americans own a cellphone of one kind or another. A whopping 97% of people in the U.S. have a cellphone, and 85% of the population use a smartphone.

Having a cell phone (and, specifically, a smartphone) is pretty much a necessity these days as the world moves increasingly into the digital space. It’s certainly possible to get by without one, but this is a decision that requires accepting inconveniences and difficulties as employers, retailers, airlines, hospitals, etc. increasingly expect that everyone has a smartphone in their pocket.

Solution iconIf you have bad credit, you might be worried that you won’t be able to qualify for smartphone financing or a plan through a carrier. Even if you do qualify, you might be worried about paying a hefty deposit upfront. Luckily, there are a number of strategies you can apply for both purchasing a device and signing up for service when your credit is less than ideal.

Getting a cell phone with bad credit without paying a deposit might require a bit of creativity, but it’s certainly possible.

Getting a Cell Phone: Why Does Your Credit Score Matter?

When it’s time to get a new cell phone, your credit score might not be the first thing on your mind. After all, you’re not buying a house or a car, so why should anyone pull your credit report?

man holding cellphone purchased with bad credit

The reality is, though, that there are a number of different reasons why your credit score can have an impact on your ability to purchase a cell phone and a traditional postpaid plan:

  • Device financing: The price range for modern smartphones usually spans from $700 to $1000, which often means that consumers need to finance the purchase rather than buy the device outright. When you apply for financing for a product, a credit check will be run to determine how risky you are as a borrower.
  • Postpaid plans: Postpaid plans, where you pay your bill after having received a service, typically require a credit check before signing up. Since you don’t pay for the service before using it but instead pay after the fact, companies will check your credit to determine how likely you are to pay your bills on time.
  • Subsidized phones: Some cell phone service providers will offer subsidized phones– meaning there is a discount for the phone in exchange for signing a contract. Your eligibility for the subsidies will be determined, in part, by your credit score.

If you are motivated to avoid a credit check when getting a new cell phone, you do have some options. Additionally, there are some routes you can take in order to get a cell phone, even if your credit is less than ideal. Some of these options even involve a little-to-no deposit, which can be incredibly helpful when you need a phone but are strapped for cash.

It might seem frustrating that your credit is relevant for something that is so essential in the modern world– a cell phone– but it’s important to recognize that cell phone providers are businesses that are motivated to minimize their own financial risk. They can use your credit score to help determine how likely you are to fulfill the contractual obligations and pay back the money you owe on time.

How to Get a Cellphone With Bad Credit

Getting a cellphone with bad credit and little-to-no deposit is not impossible at all. All it means is that you might have to stray from the traditional contract-based postpaid plans and settle for a device that isn’t one of the brand-new models or has been previously used.

man holding cellphone purchased with bad credit and no deposit

As we’ll discuss a little later on, you can receive the benefits of a traditional postpaid plan (if that’s desirable to you) with bad credit if you are able to join a family plan or find a cosigner.

Prepaid Plan

If your credit isn’t awesome, but you need to get a new phone plan, one of the easiest ways to do so is to simply get a prepaid plan. As opposed to postpaid plans, where you pay a bill the month after using the service, prepaid plans involve paying a specific fee in advance every month or refilling your minutes, texts, and data as needed.

Prepaid cell phone plans don't require a credit check or a contract.

Since you are paying ahead of time for services that you have yet to use rather than agreeing to repay services you have already used, prepaid plans don’t require a credit check. This means that your credit won’t have any effect on your ability to get a prepaid plan. That being said, if you’re buying a new phone at the same time and you can only afford to buy it through financing options, you will face a credit check for the phone purchase.

If possible, you might choose to use an old phone or purchase a used phone with cash that you can then use with the prepaid plan. This way, you can completely avoid the credit check or a required deposit for having bad credit. Of course, you will need to pay your monthly bills in advance rather than after the fact, but you won’t face a hefty deposit upfront.

AT&T Plans

AT&T offers a number of prepaid plans, one of which includes unlimited high-speed data with 5G access for $50 a month (after an autopay discount of $15 per month.) One of their cheapest plans is only $25 a month when you pay for 12 months upfront, offering you 16 GB of data and excluding taxes and fees.

As of May 2023, AT&T is advertising that you can get a free SIM card when you bring your own phone and have the $15 activation fee waived when you sign up for one of their prepaid plans with a compatible phone.

Verizon Prepaid Plans

Verizon also offers a number of Prepaid options, ranging from $30 to $60 a month when you enroll in autopay. Without autopay, these plans range from $35 to $70 per month.

The cheapest plan gives you unlimited talk and text but only light data use. The cheapest plan that allows a bit more wiggle room for data usage gives you unlimited talk and text, 5G access for capable devices, and 15 GB of data. Their priciest plan is the “Unlimited Plus,” which costs $60 per month after the $10 a month auto pay discount and includes a lot more bells and whistles for people that heavily rely on their smartphones.

Other Carriers That Offer Prepaid Plans

Here are some other carriers that offer prepaid plans. Depending on your needs and expected usage, there’s likely a plan out there that will fit what you’re looking for:

  • T-Mobile
  • Sprint
  • Tello
  • Xfinity Mobile (Best for people that already use Xfinity cable/phone/internet services, as it costs an extra $25 per month if you don’t)
  • Spectrum Mobile (Only available to customers that have Spectrum Internet)
  • TextNow Wireless 2 GB LTE (Actually, a phone app that you can use when connected to wifi)

No Contract Plans

No contract plans are similar to prepaid phone plans– in fact, prepaid plans fall under the umbrella of no contract plans. Rather than having to sign on for a contract of two or so years, you can sign on for a monthly plan that lets you opt out whenever you want without a cancellation fee.

A no-contract phone doesn't require that you commit to a specific carrier for several years as is common with traditional post-paid plans.

A number of the big-name carriers offer no-contract options, and there are also a number of smaller providers that advertise similar or less expensive plans. The strictest definition of prepaid plans requires that you pay for every minute you talk and every text you send, refilling your minutes, texts, and data when necessary. No-contract plans, on the other hand, only involve one set bill each month. It’s worth noting that the line between prepaid plans and no-contract plans is quite blurry.

For example:

  • AT&T advertises their prepaid plans as costing a set price of $50 a month rather than requiring you to purchase minutes, texts, and data.

Join a Family Plan

Another option when it’s time to get a cell phone with bad credit is to join a family plan. Major cell service providers offer multi-line cell phone plans where you can share data with other people or even have access to unlimited data.

A family plan allows a number of mobile contracts to be linked under one account with only one monthly bill payment. They often offer a discount and only require a credit check for the primary account holder.

When you’re on a family plan, the main account holder’s credit report will be pulled in order to initially establish service. However, the people that are added to the plan won’t have to pass a credit check. In this situation, the primary account holder is the only one that is responsible when payments are missed, so it’s important to make sure that you are holding up your end of the bargain so you don’t cause trouble for them.

Joining a family plan allows you to bypass the credit check and maybe even save some cash.

For example:

  • It often costs $65 to $90 a month to sign up for an unlimited plan with a traditional carrier, which is pretty steep (ranging from $780 to $1080 per year.)
  • If you’re on an unlimited family plan where the cost is split between five different people, it could cost you as little as $24 a month (full disclosure, this is with autopay turned on and before taxes and fees.)
  • By comparison, this means that you could be paying as little as $288 a year, meaning that you could be saving about $500 to $800 every year!

Pay a Security Deposit

Are you ready to get a cell phone but don’t have any credit history, a very thin credit profile, or straight-up bad credit? One option is to put down a deposit. Though this can be a bit frustrating, it’s a method worth considering if you have the cash on hand.

If you are not opposed to paying a deposit up-front but just want to get a regular cell plan, this is another option when you have no credit or bad credit. Deposits are usually eligible for refund once you have paid your bill in full and on time for a specific number of months. That being said, you'll want to read the fine print for each carrier as they can vary.

How much the deposit will be is going to depend on both your credit score and the carrier you are working with. The specifics of how deposits are handled vary between carriers, so it’s important that you take a close look at the fine print before moving forward.

Find a Cosigner

Another option on the table is finding a cosigner to help you get a cell phone. Of course, this is only useful if the cosigner (either a family member or close friend, usually) has good credit. It’s also important to understand that the account would be opened solely in their name, meaning that they are the one that is responsible if you don’t hold up your end of the bargain and pay your bill.

If you can find someone with good credit that is willing to act as a co-signer, it can allow you to get a new phone with a traditional plan even if you have bad credit. The co-signer will be responsible if you fail to make payments.

One of the good things about this option is that the account can eventually be moved into your name by the co-signer. Though the carrier will usually run a credit check before this process is complete, you don’t necessarily have to pay a deposit.

Each carrier handles the process of having a co-signer and transferring account names differently, so it’s always a good idea to look at the fine print offered by the specific carrier you are considering working with. As an example, T-Mobile will allow account ownership to be transferred after 90 days.

Buy a Pre-Owned Phone

If you’re trying to avoid the credit check that comes along with financing a new smartphone, consider trying to buy a pre-owned phone instead. These will often be quite a bit cheaper than the newest, snazziest versions of popular Apple and Android devices. You can also find refurbished options sometimes offered by wireless carriers, smartphone companies, or private sales.

Buying a pre-owned or refurbished phone could give you the ability to purchase the device outright rather than needing to obtain financing.

  • You can find older models of phones on sites like eBay for significantly cheaper than purchasing the newest models unused.
  • You also might find that someone in your family or friend group has an old phone they are no longer using that is simply collecting dust in a drawer.

You will need to put a new SIM card in your phone and will also need to make sure that the phone is compatible with the carrier you use.

What Is Considered Bad Credit When Getting a Cell Phone?

“Bad credit” can sound like kind of a vague term, but each cell phone company has its own specific definition of what number you need to be below in order to end up in this category.

Different companies have their own cut-off points for what they consider bad credit, but in general a score below 550-600 will be considered a subprime score.

For example:

  • Sprint considers credit scores over 700 to be “excellent.”
  • While credit scores under 550 are deemed “fair.”
  • While “fair” might not sound like a horrible adjective, this is actually synonymous with “bad” in the eyes of the phone company.

For another example, let’s look at AT&T:

  •  According to bits and pieces of anecdotal evidence from users, people with a credit score under 600 will be required to make a deposit in order to get a new phone and traditional postpaid service.

You are not completely out of luck when it comes to getting a phone if your credit is less than ideal. Additionally, it is possible not to pay a hefty deposit when you have bad credit. However, depending on how pressing your need for a new phone is, you might consider building your credit first before applying in order to make the process simpler and more straightforward.

How to Get a Post-Paid Cell Phone Plan With Little-to-No Deposit

If your primary concern is avoiding putting a deposit down when getting a cell phone and you want to sign up for a standard postpaid plan, here are your best options.

Enroll in a Family Plan

Enrolling in a family member with your relatives or friends will help you avoid paying a deposit even if you have bad credit. The credit check will only be for the primary account holder, and they will also be the one held accountable if bills go unpaid. For this reason, it’s important to make sure you are taking care of your end of the deal to ensure that they are not punished for your unpaid bills.

Find a Cosigner

The other best option for avoiding paying a deposit when you have bad credit is to find a cosigner. The cosigner will be the person listed as the account holder, meaning that it will be their credit report that is pulled and their responsibility if you stop paying your bills.

Cell Phones and Credit Scores: Frequently Asked Questions

Before we sign off, let’s take a look at some of the most common questions about the relationship between cell phones and credit scores.

How Does Cell Phone Financing Work?

There are a number of different ways that you can finance a cell phone:

  • Through the manufacturer
  • Through the phone’s wireless carrier
  • Through a third party

Financing Through the Manufacturer

Major phone manufacturers like Apple or Samsung typically offer financing options. This type of financing typically works in a similar way as credit cards, meaning that a line of credit will be opened in your name.

This means that activity on your account will be reported to the credit bureaus. If you make your payments on time and keep your account in good standing, it can help you build credit over time.

Financing Through the Wireless Carrier

There are probably going to be a number of different financing options when you buy a phone from the wireless carrier you plan on using. One way is to lease a phone with the option to upgrade in the future. Another is to pay off the phone monthly without interest (for a set period of time) through an installment plan.

  • In some cases, choosing to finance or lease your phone through the carrier will require making a down payment.

Activity regarding your financing or leasing agreement usually isn’t reported to the major credit bureaus. This means that this method of getting a phone typically won’t help you build credit.

Financing Through a Third Party

You might find that other third-party retailers offer financing for phones, such as electronics stores. It’s common for these types of stores to offer credit cards that come with 0% interest for a specific period of time.

Can Financing a Cell Phone Affect My Credit?

Financing a cell phone can, in some cases, affect your credit. Here are the three ways it can have an impact on your scores:

  1. If your account is reported to the credit bureaus, such as when you finance through one of the major device manufacturers, it can help you build a positive credit history when you are consistently on time with your payments. On the other hand, it can negatively impact your score if you end up missing payments.
  2. A hard inquiry might be run on your credit report if you are financing through a phone manufacturer, wireless carrier, or a third party. Hard inquiries can make your credit score drop temporarily, but this usually isn’t too big of a deal unless you have lots of them on your report.
  3. Your account could get closed or sent to collections if you fall behind on your payments. This will appear on your credit report and likely harm your credit, regardless of the method you used to finance or lease your phone.

Will I Build Credit By Paying My Cell Phone Bill?

Fortunately or unfortunately, depending on your perspective, cell phone providers usually won’t report your payments to the three major credit bureaus. This is the case even though they will typically check your credit score when making a decision about whether to approve you for an installment plan or a phone contract. Since these carriers don’t normally report to credit bureaus, it means that your on-time payments won’t help your credit score.

Though it might seem unfair, missing payments can hurt your credit score, even though on-time payments don’t help. For the record, one or two late payments usually won’t impact your credit as long as you catch up on the money you owe before the carrier chooses to terminate the contract and turn the account over to collections.

What Happens If an Account Is Sent to Collections

If the account does end up in collections, though, it will hurt your credit. Collections accounts show up as a tradeline on your credit report. This won’t just harm your score, but it won’t be something that lenders look favorably on when determining your creditworthiness for a loan or line of credit.

It’s also possible to hurt your credit score if you disconnect your phone services without paying the remaining balance or the early termination fee. Additionally, terminating your contract prematurely can result in a lowered credit score if you don’t pay the money that you owe.

  • If your credit report shows a delinquent cell phone balance, it will stay there for seven years before falling off.
  • It will be most impactful for the first few years after it first shows up on your report.

If you want all of your on-time payments to help your credit, there are services you can use, like Experian Boost. These monitor your checking account for on-time payments to service providers like cell phone companies and utility companies. Though this can potentially boost your credit score by adding up to two years of payment history, it’s worth noting that you will need to give up your bank account and other information in order to set up the service.

Improving Your Credit to Increase Your Financial Opportunities

If you need a cell phone right now and your credit is bad, using one of the many options listed above will help you achieve your goal. When getting a new device, you could choose to purchase a cheaper pre-used or refurbished option or even ask your friends and family if they have an old phone they’re no longer using. Older models tend to be cheaper than newer models as well.

  • When shopping for a new plan, finding a prepaid or no-contract plan can be a good choice for people with bad credit.
  • You can also try and hop into a family plan with other people or find a cosigner for your account.

On the other hand, if you are simply trying to plan ahead for getting a new phone and plan down the road, you might choose to use this time to work on improving your credit.

Are you ready to build your credit so you don’t have to spend time researching things like how to get a cell phone with bad credit? Are you ready to increase the number of financial opportunities available to you by cleaning up your credit report?

If so, make sure you check out our Credit Building Tips blog for tons of useful resources that will help you improve your credit scores.

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Written By:
Shaun Connell
Shaun Connell is a personal finance and credit expert with a passion for helping individuals eliminate debt and improve their credit. He's enjoyed writing investing and financial content for over 15 years, with expertise in real estate, debt, banking, credit, and wealth building. His work has been seen by millions on the web.

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