Getting your first phone contract with no credit history

Can you get a phone contract with no credit history?

Yes, it is possible, but no network can promise to accept you. When you apply for a pay monthly plan, the network checks who you are and asks a credit reference agency for your credit history. iD Mobile, for example, says an application for a pay monthly plan, with a handset or SIM-only, will probably involve a credit check.

With no history, the agency has little to report. That is not the same as a bad record: there are no missed payments or defaults. But Equifax points out that lenders want evidence you can use credit responsibly, and it lists pay monthly phone contracts among the products you need a credit history for.

What you apply for matters. A handset contract usually includes a credit agreement for the phone itself, on top of the airtime. A SIM-only plan has no phone to pay off, so the amount you commit to each month is lower.

Why does a thin credit file make approval harder?

A thin credit file is one with little or nothing on it. Experian says this is likely if you have recently turned 18, are new to the UK, or have not held a credit account in the last six years.

Each network makes its own decision. Vodafone says it uses its own scoring system, separate from the agencies' scores, so you can fail its check even if an agency gives you a high score. It also looks beyond your credit history: you may fail without a UK bank account and a UK address.

Networks confirm your identity as well. Vodafone checks your details against the electoral roll, confirms your bank account and may ask about your income and outgoings. Three says the agencies send it information from public sources such as the electoral register. Experian adds that if a lender cannot confirm you through the electoral roll, it may ask for other ID and proof of address, which can slow things down.

If a lender turns you down after checking your credit file, Citizens Advice says it must tell you why and name the credit reference agency it used.

Can you get a phone contract at 18?

Yes. 18 is the minimum age for a pay monthly contract in your own name. Tesco Mobile's pay monthly terms, for example, say the service is only available if you are 18 or over on the day you apply.

Turning 18 does not give you a credit history. Experian says you usually need an active account for at least three to six months before a credit score can be calculated. So at 18 the network has little history to look at, and your identity, address, bank account and what you tell it about your income do more of the work.

You may already be on the electoral register. According to gov.uk you can register from 16 in England and Northern Ireland, and from 14 in Scotland and Wales. If you are not, it takes about five minutes online.

• Register to vote at the address you will apply from.
• Keep your bank account in order and stay within any agreed overdraft.
• Start with a lower-cost plan rather than the most expensive handset.
• Apply once, then wait for the outcome before trying anywhere else.

What helps if you are new to the UK?

A credit history built abroad does not carry over. Experian says UK credit reference agencies only use information about UK accounts, so you start from scratch even with a strong record overseas.

Until you have a UK record, pay as you go or buying a phone outright lets you avoid the credit check altogether.

• Open a UK bank account. Vodafone says you may fail its check without a UK bank account and a UK address.
• Register to vote if you are eligible. Gov.uk says British, Irish and qualifying Commonwealth citizens can register, as can citizens of some EU countries.
• If you cannot register, add a note. Experian says you can add a short notice of correction to your Experian report explaining why you are not on the electoral roll.
• Keep a copy of your overseas credit report. Experian suggests offering it to lenders, as it may help your application.
• Use the same name and address everywhere. MoneyHelper advises checking that your application matches the details on your credit report.

Is SIM-only a better first contract?

For many people with no history, it is a sensible place to start. Pay monthly SIM-only plans are still credit checked: EE, for example, says it runs a credit check and asks your employment status when you take a SIM-only plan. But there is no phone to pay off, so the commitment is smaller, and a 12-month or rolling plan ties you in for less time.

A SIM-only plan also starts your record. Vodafone says that when you pay a monthly bill in full and on time, it updates the credit reference agencies. EE says it reports how you run your account to the agencies every month. Experian lists a mobile phone contract as a small form of credit that can show you pay on time, and says these are usually easier to be accepted for than credit cards.

Late payments are reported too. Vodafone says a bill paid more than 30 days late is recorded on your credit file and stays there for six years, so only take a plan you can comfortably afford.

Should you buy a phone outright instead?

Buying outright means there is no credit agreement for the phone. Pair a SIM-free or refurbished phone with a SIM-only or pay as you go plan and you get the handset without borrowing for it.

Refurbished phones cost less than the same model new, which makes paying upfront more realistic. MoneyHelper also notes that waiting and saving up can be cheaper than borrowing.

Pay as you go needs no credit check. O2 and EE both say their pay as you go SIMs come with no credit check. The trade-off is that there is no monthly bill, so there is no payment record for the network to report.

How do you build a credit history quickly and safely?

There is no instant fix. Experian says it can take up to six months to start seeing the benefit of the steps below, so start early if you know you will want a handset contract.

• Register to vote at your current address. MoneyHelper says councils send voter data each month, so this could improve your score within eight weeks.
• Open a current account and stay within any agreed overdraft.
• Pay bills by Direct Debit so nothing is paid late.
• Take out one small credit account, such as a SIM-only plan, and pay it on time every month.
• Space out applications. Each one leaves a search on your file, EE says its search stays there for 12 months, and Experian suggests one application every three months at most as a rule of thumb.
• If you rent, consider adding your rent payments to your credit report. MoneyHelper says some rent-reporting services have a free version.
• Consider a low-limit credit card from a regulated provider, paid in full each month. MoneyHelper warns against 'credit-building' products with high interest or fees.
• Check your credit reports for free. MoneyHelper says four agencies produce statutory reports: Experian, Equifax, TransUnion and Crediva.
• Avoid paid credit repair firms. MoneyHelper says you can do what most of them do yourself for free.

Can a parent take out the contract for you?

Yes, and it is the usual route for under-18s. The parent or guardian is the account holder, so they go through the credit check and are responsible for paying the bill. Vodafone's family terms, for example, say every additional plan on an account is subject to its standard credit check.

Some networks sell plans made for children on a parent's account. EE's Safer SIMs, for example, come with parental controls the account holder can change and spending limits that cannot be turned off.

The payment record belongs to the account holder, not to you, so a plan on a parent's account will not build your own credit history. Once you turn 18, a plan in your own name is how you start. Our family SIM plans guide compares multi-line discounts if a parent is adding a line.