How your mobile phone can help to improve your credit score

Taking out a mobile phone contract is a form of borrowing and it will show up on your credit report. Manage your phone contract well and make payments on time and you’ll improve your credit score. But if you miss a payment or are late to pay, your credit score could be negatively affected.

Getting a mobile phone contract usually involves making an initial payment and then a regular monthly payment covering fees for using the mobile network and the outstanding cost of the phone itself. The way you manage these repayments on your phone contract can affect your chances of getting credit elsewhere.

Fail to make a payment and you run the risk of having a default added to your credit report. Mobile phone contracts are not covered by The Consumer Credit Act, which means providers can decide if and when they want to report an account as being in default to the UK’s credit reference agencies.

On a more positive note, having a mobile phone account on your credit report can improve your credit rating. Making payments on time will help to demonstrate to potential lenders you approach in the future that you can be trusted to pay back what you owe.

If you miss a mobile phone payment and your provider reports this as a default, it can appear on your credit report for up to six years. This can affect your ability to get other credit during this time. Its impact on your credit score will eventually decrease and keeping up with future repayments will help to repair your credit rating.

Taking out a phone contract is a form of credit, and providers will require you to pass a credit check before they’ll give you a contract. Being approved for a mobile phone contract can be easier than obtaining other forms of credit, but if the provider isn’t happy with your credit score they may refuse you a contract or place restrictions on your usage.

It's important to make sure your credit report is accurate before applying for any form of credit, including a mobile phone contract. Any inaccuracies in your data could see you being wrongly refused credit or being hit with higher repayments.

You can take a look at your own credit report using a credit check service.