Article by Sam Griffin - 21st February 2020

Refused A Mobile Phone? Find Out Why

Nowadays mobile phones are more popular than some of our favourite everyday things, like microwaves, pets, and televisions. But are mobile phones really more valuable than hot food, loyal companionship, and Sir Trevor McDonald’s sultry tones? ‘Yes’, say a massive 96% of Brits aged 16 and over, who frequently use mobile phones every day, ‘Trevor McDonald isn’t even on TV anymore.’

The sheer abundance of mobile phones makes it seem like everyone’s got one and, according to the stats, that’s almost true. But the near universal use of mobiles only makes it more confusing when your application for one is refused. Refusal happens to many people and you’re certainly not alone – a good chunk of that 96% of Brits will have faced a rejected application or two, so it’s worth remembering that there’s always the potential to be accepted providing you meet the required criteria.

Whether you’ve applied with O2, Vodafone, or almost any UK mobile provider, there are important factors that can make or break an application and understanding what these are can ensure that you’re best prepared and fully informed about what to expect when you next apply.

If you’d like the short version, a refused mobile phone application often lies with the applicant’s Credit Report. Negative makers such as late payments, defaults, and CCJs can give mobile companies reason to refuse the application. Another common reason for rejection is that the Credit Report itself is considered ‘thin’ and lacking information on which an informed decision can be based – again leading to rejection.

To understand exactly what a mobile phone company will see when you apply, it’s best to check your Credit Report for yourself. Our Multi Agency Credit Report is the most detailed in the UK, collating the complete information from all four Credit Reference Agencies – Equifax, Experian, TransUnion, and Crediva – meaning we’re the only service to show your full Credit Report data in one place.

If you haven’t already, you can try checkmyfile free for 30 days, then just £14.99 per month which you can easily cancel online at any time, or by freephone or email. Our professionally qualified, UK based team of Credit Analysts can be contacted by secure message or freephone if you need any guidance with your Credit Report.

Now onto the longer version…

Why was my mobile phone application refused?

Whether you’re applying for a mobile phone with a contract or a SIM only deal, the application will likely involve the provider assessing your Credit Report to try and get an understanding of what type of customer you are likely to be. The more reliable you seem, the more confident a mobile provider will be when accepting you as a customer. This means that if there’s a negative entry (such as a late payment or case of arrears) on your Credit Report, it can impact your chances of a successful application, even leading to you being refused outright.

The largest, most well-known mobile phone providers such as O2, Vodafone, Virgin, and EE (to name just a few) all tend to perform credit checks on their customers before accepting them.

Your Credit Report is essentially a record of your financial history for the last six years or so. It will hold specific information about how you’ve managed your accounts, such as credit cards, loans, and even old mobile phone contracts. Because historic repayment behaviour is often seen as a reliable indicator of future repayment behaviour, mobile phone suppliers will assess your Credit Report to gauge your creditworthiness – an attempt to see how reliable a customer you’re likely to be.

A clear Credit Report showing perfectly managed account repayment history can make it easier to be accepted for a mobile phone (as well as a range of other accounts) than a Credit Report littered with late payments, defaults, and other ‘risky’ markers.

In addition to your existing and historic account information, which includes the account repayment history, the amount owed, credit limit, and more, your Credit Report will also detail any Court Records lodged against you (such as CCJs and bankruptcies), your Electoral Roll listings, Financial Associations, recent credit applications, and other data relevant to a credit check.

Below are some of the most common Credit Report related reasons people might be declined a mobile phone.

Late payments

Late or missed payments are among the most common negative entries that are found on Credit Reports. These begin as relatively minor adverse marks, but still have the potential to harm your application’s approval chances. Exactly how serious a late payment will be considered will depend on the particular mobile phone company that you’ve applied with – some are happy to accept customers with a late payment or two while more stringent ones (especially where you’ve applied for a particularly expensive handset) may automatically refuse your application the moment a late payment marker is flagged on your Credit Report.

A late payment will usually be added to your Credit Report when a lender doesn’t receive a scheduled monthly repayment on time.

Importantly, your Credit Report may hold your repayment history for old mobile accounts that you’ve held. It’s possible that late payments on mobile phone accounts are considered especially harmful as they’ll be particularly relevant for these applications.

Late payments are removed from your Credit Report once six years pass from date of account closure.

Arrears

Arrears are consecutive missed payments over a period of multiple months. For example, two missed payments in a row will be classed as two months’ arrears, three missed payments as three months’ arrears, etc. Arrears are viewed by mobile phone providers to be more severe than a single late payment and can make being accepted even trickier.

Arrears remain on your Credit Report for six years from date of account closure. While they are present on your Credit Report, even if the account it relates to has been fully paid, the arrears can hurt your mobile phone application.

Defaults

Defaults are some of the most serious negative markers to be included on a Credit Report. Being accepted for a mobile phone contract with one of these lodged against you can prove challenging, as a default shows that one of your lenders has had to resort to shutting down the account after a sustained period of non-repayment. As defaults are perceived as ‘high risk’ markers, lenders and mobile phone providers alike tend to either avoid them entirely or raise the repayment amounts to offset any risk involved with doing business with the customer.

As defaults are such serious negative markers, simply repaying the amount owed will not mean your Credit Rating will instantly improve. Defaults will harm your creditworthiness substantially for six years from date of default, when they will then be removed from your Credit Report.

County Court Judgments

CCJs are Court Records that can severely damage your creditworthiness and can make getting accepted for a mobile phone (and most other types of accounts) very difficult. They are usually issued as measure of last resort to recover owed money, as the legal process of applying for a CCJ is time consuming and fairly expensive.

Mobile phone companies want to mitigate risk and find the most reliable customers, meaning they tend to favour applicant’s without Court Records as they carry a high level of perceived risk.

Like with all the above negative markers, CCJs can damage your creditworthiness regardless of whether they are subsequently paid and settled. While the CCJ marker is on your Credit Report, it will likely damage your Credit Rating and chances of a successful application. CCJs last for six years, from date of issue.

Bankruptcies

Bankruptcies and other insolvencies don’t have specific restrictions that prevent you from taking out a mobile phone contract, as they do with regular finance like credit cards and loans. That said, you will likely encounter difficulty when applying for a mobile phone, or almost any account, if a bankruptcy or other insolvency is recorded against your Credit Report due to the high level of perceived risk they carry, much like defaults and CCJs.

Bankruptcies and other insolvencies are removed from Credit Reports once six years pass from the start date, as long as they are marked as ‘discharged’.

Missing an Electoral Roll listing

The Electoral Roll has long been central to Credit Reports and its importance remains as relevant as ever. An active Electoral Roll listing shows mobile phone providers (and any companies you apply with) that you have stability in your living arrangements, as well as making it easier to ensure that your identity is genuine. As such, you will likely find it easier to be accepted for a mobile phone account if your Electoral Roll listing is active and showing correctly on your Credit Report.

Being registered on the Electoral Roll not only allows you to vote, but makes it easier and quicker to be accepted for mobile phones, credit accounts, and even jobs.

Financial Associations

Financial Associations are other individuals with whom you’ve had a recorded financial link. Often these are partners, spouses, or family members, but even friends and flatmates can be recorded on your Credit Report if you’ve shared an account – for example with a gas or electricity supplier.

While you have someone named as a Financial Association on your Credit Report, this person’s Credit Report may be viewed whenever you make an application. This means that any negative information on their Credit Report can directly harm your applications for a new mobile contract, even if your own Credit Report is perfectly clean. Any of their late payments, defaults, CCJs, or bankruptcies can cast a shadow on your application while you remain linked to that person, potentially damaging your approval chances.

Once created, usually following a joint application or use of shared facilities, a Financial Association entry on your Credit Report will remain indefinitely until you request to have it removed. Providing your Financial Associations are no longer active, you can request to have them taken off your Credit Report. Check out our guide to Financial Associations for more on this.

Once a Financial Association has been removed from your Credit Report, it will no longer influence your applications for mobile phones or other products.

If you’re curious about any of the above entries and how your Credit Report looks, it’s best to check it out of yourself.

What if I don’t have any negative Credit Report markers?

Negative information is only one reason that you might fail a credit check for a new mobile phone. A ‘thin’ Credit Report that lacks information can make it equally difficult to be accepted. If you are not credit active you may find that your Credit Report is quite shallow and this can be its own source of problems.

A healthy Credit Report blooming with positive information goes a long way in giving mobile phone providers confidence that you’re the type of customer that they’re looking for. If instead your Credit Report is barren (even if it means you technically don’t have any negative entries) the organisation that you apply with may struggle to find the confidence it needs to accept your application, as there is little data on which to base a decision.

The trick to a healthy Credit Report is to have plenty of positive data (things like making all your payments on time and having a range of different account types). Having negative data, such as the adverse entries we went through earlier or simply no data can be equally bad for your applications.

Aside from your Credit Report, which makes up a substantial portion of an application for a mobile phone, there are some other factors that influence the outcome.

Income and employment status

Mobile phone providers will want to know that you have the intention to make the scheduled payments, so they will check your Credit Report. But when it comes to your ability to meet payments as they fall due, they’ll look at your income and employment status as well.

High enough income to cover the agreed payment terms and consistent employment will instil confidence in the mobile phone provider that you’ll have the means to pay the required amount. That’s certainly not to say full time employment or a high salary is mandatory for a mobile phone contract, but they are likely to make the application go that little bit smoother.

Outgoings

It’s all well and good having a high income, but if you’re already stretched on existing financial obligations, a mobile phone provider might be worried about your ability to meet the payment terms. It’ll have a responsibility – and not just from a profit-making perspective – to avoid putting people into monthly contracts if they’ll struggle to keep up with scheduled payments.

Amount paid up front

When applying for a mobile phone, you can often choose to make a lump sum payment upfront – opting not to means you’ll pay more each month for the mobile contract. The reason mobile phone providers allow you to make an upfront payment is simple: because it’s safer for them to receive a guaranteed payment immediately than to wait for monthly payments. When looking at an application from a risk-mitigation perspective, mobile phone providers favour these upfront fees as it guarantees instant payment and reduces the outstanding amount it must wait to receive.

Length of contract

Similarly to the amount you pay up front, you can often choose the length of your contract. Put simply, the shorter it is, the more you pay each month to cover the full cost. Applying for a mobile phone with no amount paid upfront and a short contract can mean that your required monthly payments will be higher. As a rule of thumb, the more you’re looking to pay monthly, the more stringent a mobile phone provider will be when it comes to accepting your application.

In practice, you may find that it’s not one single factor that has led to a declined mobile application. It could very easily be that a mix of all these factors, including the health of your Credit Report, that meant you were declined.

What if I submit another Mobile Phone application?

Submitting another application may seem tempting, but if you apply with the same information for the same mobile phone contact, the result you receive will very likely be the same.

It’s also worth noting that every time a credit check is performed on you, including when you apply for a mobile phone, a Credit Application Search will be recorded on your Credit Report. While these searches are not inherently bad for your Credit Rating, if you have a lot in a short period, it’s possible that the accumulation could harm subsequent applications.

Many applications in a short period can be seen as a sign of desperation, which mobile phone providers and lenders alike tend to avoid. Also, the presence of many Credit Application Searches implies that other companies have been declining you (even though the result of the search is not disclosed), which might give other companies you apply with reason to question your application. The average number of Credit Application Searches is one per month.

Can I get a mobile phone with bad credit?

You certainly can get a mobile phone contract with a low Credit Rating; bad credit just means getting accepted will be more tricky. A successful application is never guaranteed, regardless of how high your Credit Rating might be. By the same token, you’re never guaranteed to be declined either. The decision to accept your application lies solely with the mobile company you’re applying with. It’ll have unique criteria that it needs to meet when accepting customers, so just because your application has been declined by one mobile phone provider doesn’t necessarily mean it will happen again with another company.

You will likely find that high-end smartphones and inclusive, more expensive contracts are subject to credit checks, meaning the health of your Credit Report will play a crucial role in whether you are accepted.

You may find organisations offering mobile phone contracts without a credit check – but often these are SIM only, meaning no device is included in the deal. Generally speaking, SIM only contracts without a credit check are limited to smaller data plans and might even be proportionally more expensive – all to offset the risk involved with accepting customers when not performing a credit check first.

What can I do?

It’s worth bearing in mind that, in general, the more expensive a device or airtime plan is, the higher the acceptance criteria will be.

If you’re in any doubt about why a mobile phone provider has refused your application, you’ll want to check your Credit Report to see the data for yourself. This way you’ll be able to see exactly what the mobile phone provider saw, and any negative markers should be highlighted.

How do I check my Credit Report?

If you’ve been declined a mobile phone contract and want to know why, or are just curious about your Credit Rating, checking your Credit Report should be the first port of call, as it’ll show the information an organisation will have access to when assessing your application.

There are four UK Credit Reference Agencies – Equifax, Experian, TransUnion, and Crediva – so you’ll have a unique Credit Report at each of them. To be thorough, you’ll want to check with all four to ensure that no stone is left unturned. To save time, you can use checkmyfile to view your Multi Agency Credit Report – the UK’s most detailed Credit Report with complete data from all four Credit Reference Agencies.

If you haven’t already, you can try checkmyfile free for 30 days, then just £14.99 per month which you can cancel easily online at any time, or by email or freephone. Our professionally qualified Credit Analysts are accessible through your account if you need any guidance about the data on your Credit Report.

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