As part of our duty to inform you about everything to do with mobile phones and smartphones in particularly, we have been approached by a number of our regular users to look into a relatively new phenomenon, bad credit mobile phones.
Now, if we are honest – and you all know that we are – we knew very little about these phone contracts to begin with. And that’s exactly what they are, a form of phone contract available from providers throughout the United Kingdom.
And so we put on our Sherlock Holmes hat and did some investigation into these phone contracts to see exactly what they are about. This is what we found out.
Bad credit means no opportunity for a regular phone contract
So let’s start at the beginning, as some of you may be in this boat already. Let’s be honest, financially, over the past five years, times have been tough on the population of the United Kingdom.
Many people are struggling day by day to get by, to feed their families and to pay their bills, loans and other forms of credit. And that has led to many of them defaulting on these credit payments. This eventually meant a start to a pattern of bad credit which in turn scuppers any hope of securing further credit in the form of a loan or even something like a mobile phone contract in the future.
So where do people like that turn if they want a mobile phone on a contract basis? Let’s be honest here, everybody should have access to a phone of some kind. These modern marvels really help everyone that uses them each and every day in some way.
That’s where bad credit mobile phone contracts come in
So as with many things in life, companies saw the business opportunity in giving people with bad credit ratings the chance to own a phone on a contract basis. And that is where bad credit mobile phones started.
But how do they work exactly?
Anyone can apply for such a contract, but obviously, they are aimed at a specific group of people – those with bad credit ratings. To apply, the company will need a number of documents including proof of identity (in the form of an ID document, passport or even a driver’s licence), some form of letter from their employer (to show they have a job as well as their monthly income amount), and proof of address (either a bill that comes to the address, a letter from their landlord should they be renting or a bank statement showing their mortgage, should they own their house).
Once all the documents have been verified, the bad credit mobile phone provider will then narrow down a group of contracts that suit the person. This is mostly based on how much money they can pay back each month without putting themselves under further financial pressure.
Once they have identified a contract as well as a handset they prefer, the contract, which runs for 24 months is completed and the handset either handed over then and there (if in stock) or delivered the next day.
These contracts are slightly more expensive than a regular mobile phone contract that you would ordinarily have access too, but of course, someone suffering from a bad credit rating does not.
What phones are available?
Interestingly, there are a range of phones available on a bad credit mobile phone contract. These include many of the new budget smartphones entering the market (which are incredible and can do much that an Apple or Samsung handset can), higher ranged smartphones (such as the iPhone 6s and the Galaxy S7) as well as refurbished phones which offer a cheaper contract option.
So are these phones just for those with bad credit ratings?
Well, not actually although obviously, this is the intended target market. These contracts can also be used by people trying to build up a positive credit history. Often, individuals just entering the job market are turned away from forms of credit because they do not have any credit history whatsoever. By taking out one of these contracts and paying it off over its 24-month duration, they can put a positive check mark next to their credit history and begin to build in a manner that will allow them to then apply for credit from banks or other financial institutions for example.
Is it worth it taking out such a contract if I have a bad credit rating?
At IAPS Phones, we believe that everyone should have access to a smartphone, so in regards to this question, our answer is most certainly a resounding YES!
Yes, the contracts are more expensive, but again, this is to protect the provider should someone default, not pay their monthly contract fees and run off with the handset, so for us, this is totally understandable.
More info on this form of mobile phone contract is available as well as on the subject of bad credit mobile phones.