Phone contract credit checks: what score you need and how they work

What credit score do you need for a phone contract?

There is no set number. Networks do not use your Experian, Equifax or TransUnion score to decide. They look at the information in your credit report and run it through their own scoring system, alongside what you tell them on the application.

Vodafone, for example, says it uses its own scoring system, separate from the agencies' scores, so you can fail its check even if an agency has given you a high score. Citizens Advice explains that each lender sets its own threshold, which is why one lender can refuse you and another accept you.

The score you see in an app is still a useful guide to how lenders may view you. Just be aware the three main agencies use different scales, and two of them have changed recently, so the same person can have very different numbers.

• Experian rates 861-1000 as Good and 641-860 as Fair. Some banking apps still show the old Experian score out of 999.
• TransUnion's new bands are Good 653-785, Fair 563-652 and Low 488-562. Some apps will show the old score out of 710 until they switch.
• MoneyHelper also lists a fourth agency, Crediva, alongside the three main ones.

What do networks check besides your credit score?

A phone contract check is about more than your payment history. MoneyHelper notes you can be refused even with an excellent credit history, because lenders also judge whether you can afford another commitment.

Vodafone's published process is a good example of what to expect. It checks your details against the electoral roll, confirms your bank account, may ask about your monthly income and spending, and then searches your file with Experian, Equifax and TransUnion. It also needs a UK bank account and a UK address.

• Identity and address: being on the electoral register helps lenders confirm who you are and where you live.
• Payment history: missed payments, defaults and arrears on other accounts.
• Public records: County Court Judgments (CCJs), IVAs and bankruptcies.
• Existing debt and how much of your available credit you use.
• Financial associations: people you share a joint account or loan with.
• Affordability: your income and outgoings, which are not on your credit report.
• The network's own records if you have been a customer before.

Is a phone contract credit check a hard or soft search?

Applying for a pay monthly phone contract is a hard search. Other lenders can see it on your credit report, and several in a short space of time can suggest you are relying on credit. Experian says too many hard searches can affect your score for six months.

How long the search stays on your file depends on the agency. Experian says most hard searches drop off after 12 months, while MoneyHelper says hard searches can remain for up to two years.

A soft search is different. Only you and the agency can see it, so it does not affect your score however many you have. Checking your own credit report, an identity check and an eligibility checker are all soft searches.

Do you need a credit check to upgrade your phone?

Usually yes, if the upgrade includes a new phone paid for in instalments. That is a new credit agreement, so the network needs to assess it again, even if you have paid your current contract on time.

Vodafone, for example, runs a credit check when you upgrade a Device Plan, and when you take a Flexi-upgrade before the end of your minimum term. Rules for other networks differ, and whether a SIM-only upgrade or plan change needs a check varies by provider. Our guide to each network's credit checks covers what they publish.

If you are refused an upgrade, ask your network what else it can offer. Vodafone says its advisers can tell you if there are other plans available, such as a SIM-only plan instead of a plan with a device loan.

Does a phone contract affect your credit score?

Yes, in three ways. The application leaves a hard search. The contract then appears as an account on your credit report. And each month's payment, on time or late, can be recorded.

MoneyHelper counts mobile phone providers as credit providers when you have a phone contract, though not when you are on pay as you go. Vodafone says it keeps sharing information about you with the agencies for as long as you are a customer. Experian notes that some companies do not share data with all three agencies, so the contract may not appear on every report.

Missed or late payments stay on your report for six years, according to Experian, Equifax and MoneyHelper. Their effect on your score fades as the record gets older, as long as later payments are on time.

Can a phone contract help build your credit history?

It can. Experian lists a mobile phone contract as one of the small forms of credit that can show lenders you pay your bills on time. That is useful if you are 18, new to the UK, or have not held a credit account in the last six years.

It only helps if you keep up the payments. A direct debit makes it much harder to miss one by accident. If you have no credit history yet, a cheaper SIM-only plan or a lower-cost handset may be an easier first step than a high-value phone. Our guide to getting a contract with no credit history goes into this in more detail.

Does cancelling a phone contract affect your credit?

Cancelling on its own is not a mark against you. What matters is whether you leave money owing. The device part of a contract is a loan, so ending early normally means paying off the rest of it.

If a balance is left unpaid, the network can tell the agencies. Vodafone says it may record an outstanding debt that is not repaid in full and on time. Experian explains that a default can follow several months of missed payments, often three to six, and stays on your file for six years from the date of default, even if you pay it off later.

If you change your mind straight away, credit agreements covered by the Consumer Credit Act come with a 14-day cooling-off period, according to Citizens Advice. If you are struggling to pay, contact your network early and get free advice from MoneyHelper or Citizens Advice before a default is recorded.

How can you improve your chances before you apply?

None of these steps makes acceptance certain, but each one removes a common reason for refusal.

• Check your statutory credit report with each agency. It is free, and checking does not affect your score.
• Correct any mistakes, such as old addresses or accounts you do not recognise.
• Register to vote at your current address, and use exactly the same address on the application.
• Use a soft-search eligibility checker where one is offered before you make a full application.
• Space out applications. Experian suggests no more than two or three every few months as a rule of thumb.
• Choose a phone and plan that fit your budget. A lower monthly cost or a SIM-only plan can be easier to pass on affordability.
• Break financial links to ex-partners you no longer share finances with.