Mobile phone plans and credit checks

When we take out a credit card, home loan or personal loan, we understand that not making our repayments can damage our credit score.

But can phone plans impact our credit report? And do we need a minimum credit score to get a phone contract?

While Telstra, Optus and Vodafone may all perform a credit check when you apply for a mobile plan, this won't normally affect your credit score.

However, if you miss a bill payment, this can be listed on your report as a default and can hurt your score.

Finder survey: Have many Australians have been rejected for a mobile plan because of their credit score?

Will my credit be checked when I apply for a phone plan?

When you apply for a postpaid mobile plan, the provider may perform a credit check to assess your suitability for the plan. This check may appear on your credit report, but shouldn't affect your credit score unless you've applied for multiple plans in a short period of time.

Different telcos will have their own approach to checking your credit when you apply for a phone plan (and they don't make this approach publicly available).

But basically if you have a good credit score or better, it's very unlikely you'll have any issues getting approved for a phone plan.

Telcos also won't perform a credit check on prepaid plans.

Which phone providers will check my credit score?

Here's when the major mobile providers will perform a credit check:

• Telstra: Your credit report may be checked on postpaid mobile services (including SIM-only and phone plans), but not on prepaid plans.
• Optus: Your credit report will be checked on both SIM-only and phone postpaid plans.
• Vodafone: Your credit report will be checked on both SIM-only and phone postpaid plans.

How do I pass a phone plan credit check?

Unfortunately, the phone companies like Telstra, Optus and Vodafone don't publish the credit check criteria they use to decide whether to approve someone for a phone plan.

However, as long as you don't have too many black marks on your credit score, have not recently moved back to Australia from overseas or are not a temporary resident, you shouldn't have too many problems getting a phone plan.

If you do fail the credit check, there are things you can do to improve your credit score, like paying off any debts or fixing any errors on your credit report.

How to get a phone plan with no credit check

If you're looking to get a new mobile plan but don't want to have your credit checked when you apply, your best bet is getting a prepaid plan.

Prepaid phone plans won't require a credit check, and many now offer data and pricing that is competitive with postpaid plans.

You could also consider plans that are paid for in advance, such as Telstra's Upfront plans. Like prepaid plans, these will generally not require a credit check.

Will my phone bill impact my credit score?

Unfortunately, simply paying off your phone bill on time each month will not normally be recorded on your credit file, and therefore won't have any positive impact on your score. Credit reporting agencies only receive payment history from licensed credit providers like banks and credit card providers, but not phone or internet providers.

But while things like your phone or utility bill aren't normally recorded on your credit file, they can still negatively impact your credit score if you have "defaulted" on a payment.

If you have an overdue phone payment of at least $150 that is at least 60 days overdue, it may be listed as a default (after the provider has sent the required notices). At this point, your phone provider will report this to the credit reporting agencies, which means your credit score may fall. The default will also remain on your credit file for 5 years.

What should I do if I miss a bill payment?

If you miss a payment, you should first try to pay off the bill as soon as possible. If you're in financial difficulty and unable to do so, you should contact your phone provider immediately to explain your situation and discuss your options.

Before your late bill is considered a default, your phone provider should first have attempted to retrieve the money, and then separately inform you that your late bill will be reported as a default to the credit reporting agencies.

What happens if I default on my phone plan?

As well as hurting your credit score, defaulting on your phone bill may also make it harder to get another mobile plan in future.

How do I avoid defaulting on my phone bill?

The easiest way to avoid defaulting is simply paying your bill on time, ideally using direct debit. As mentioned above, if you do miss a payment, make sure to pay it off as soon as possible and contact your provider if you are unable to pay.

Alternatively, you could take out a prepaid mobile plan that you pay for upfront.

Frequently asked questions

• Do phone bills affect credit score in Australia?

  Yes, your phone bill can affect your credit score, especially if you default on your phone plan debt. In Australia, a missed payment is any that hasn't been paid within 14 days of the due date, and a default is when you are more than 60 days late on a bill of $150 or more.² A default on your phone bill can appear as a black mark on your credit report, but a missed payment that hasn't reached the default stage is not normally listed.

• How do I pass a Telstra credit check?

  Unfortunately, there's no golden formula for passing the Telstra credit check when you apply for a postpaid plan. In fact, Telstra doesn't publish any information about how it scores its creditworthiness rating system.³

  However, it does collect information on your credit history, income, financial history (including payment history and defaults, bankruptcies or other major credit infringements). As long as you have a relatively positive credit history, you should have no problems being approved for a phone plan.

Written by

Thomas Stelzer

Journalist

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Tom Stelzer is a journalist with 6 years of experience covering personal finance, specialising in investment and cryptocurrency. With a Master of Media Arts and Production and a Bachelor of Communications in Journalism from the University of Technology Sydney, Tom provides expert analysis on digital assets and market trends, helping readers navigate the fast-evolving world of finance. See full bio