Published in November 9, 2023
Having a reliable mobile phone plan is essential for staying connected with friends, family, and the world at large. However, when applying for a phone plan in Australia, one critical aspect that can influence your eligibility and terms is your credit score. A credit check is standard practice for many service providers, and understanding the ideal credit score can make the application process smoother and more favourable for consumers.
If you are fairly new to the idea of credit checks and credit scores, we have several other resources that explain these topics specifically:
Telstra has introduced a new type of postpaid plan called Upfront Plans that do not require a credit check. Upfront plans are month-to-month plans that are paid upfront. This makes them a good option for people who have bad credit or who do not want to be tied into a long-term contract.
In addition to Upfront Plans, customers can also get any Telstra SIM-only plans without a credit check. If you want to pair your Upfront or SIM-only plan with a device from Telstra, this will require a credit check.
Unlike Telstra, which offers prepaid plans without credit checks, Optus requires a credit check for all postpaid plans. However, Optus offers a variety of affordable prepaid plans that are a good option for those who want to avoid a credit check.
Optus uses Equifax and Illion to conduct credit checks. They will typically look at your credit history, income, and employment details. If you have a good credit history, you are more likely to be approved for a plan with more data or features.
Vodafone, like most major telecommunications providers, performs credit checks for both SIM-only plans and plans that include a new handset. This is because these plans are not paid upfront and the company needs to assess the customer’s creditworthiness before extending them credit. Vodafone utilizes Equifax and Illion to conduct these credit checks.
Vodafone’s credit check process involves reviewing the customer’s financial history, including their credit score, income, and employment details. If the customer has a good credit history, they are more likely to be approved for a plan with more data or features.
*Please note that the information provided is correct as of the date of writing (November 2023). Credit check policies and requirements may change over time, so it is always best to check with the specific provider you are interested in for the most up-to-date information.
Postpaid phone plans are typically more expensive than prepaid plans, but they offer more flexibility and features. For example, postpaid plans often include unlimited calls and texts, as well as a large data allowance.
Postpaid plans are also more likely to require a credit check than prepaid plans. This is because postpaid providers are essentially extending you a line of credit by allowing you to use their services without paying upfront.
If you have a good credit score, you should be able to qualify for a postpaid phone plan from any of the major providers. However, if you have a bad credit score, you may be denied approval or may be required to pay a deposit.
Prepaid phone plans are a good option for people with bad credit or who don’t want to go through a credit check. With a prepaid plan, you pay for your service upfront. You can then recharge your account as needed.
Prepaid phone plans typically offer less flexibility and fewer features than postpaid plans. For example, prepaid plans may have limited data allowances and may not include unlimited calls and texts.
However, prepaid plans are a good way to avoid overspending on your phone bill. And, because you pay for your service upfront, there is no risk of defaulting on your payments and damaging your credit score.
SIM-only plans are a good option for people who already own a phone and don’t need to purchase a new one. With a SIM-only plan, you simply purchase a SIM card and insert it into your existing phone.
SIM-only plans are typically cheaper than postpaid phone plans, but they may not offer the same level of flexibility and features. For example, SIM-only plans may have limited data allowances and may not include unlimited calls and texts.
SIM-only plans may or may not require a credit check. It depends on the provider.
Phone plan approval in Australia is influenced by various factors beyond just credit scores. It’s essential to consider these additional aspects:
Your income and overall financial stability play a crucial role in the approval process. Phone providers often assess whether your income is sufficient to cover the monthly plan fees. Having a stable income source can boost your chances of approval.
Your employment status, such as being employed full-time, part-time, or self-employed, can affect your eligibility for phone plans. Providers may view stable employment as an indicator of their ability to meet financial commitments.
Your payment history with other bills and credit accounts is an influential factor. A history of on-time payments demonstrates your financial responsibility and can increase your likelihood of approval.
If you have a lower credit score or limited credit history, some providers may request a security deposit as a guarantee. This deposit can be used to cover any outstanding bills if you fail to make payments. While it may be an added cost, it can help individuals with lower credit scores secure a phone plan.
Phone providers often require proof of identity and residency to minimise fraud and assess your eligibility. Make sure you have the necessary documents, such as a driver’s license, passport, or utility bills, readily available.
Existing outstanding debts or defaults can negatively impact your phone plan approval. Providers may be concerned about your ability to manage additional financial commitments if you have unresolved debt issues.
The type of plan you apply for can also affect approval. Prepaid plans typically have fewer eligibility requirements, making them more accessible to individuals with various financial backgrounds.
Some phone plans may have age or legal capacity requirements. Ensure you meet the minimum age and legal criteria for the plan you’re interested in.
When your credit score is less than favourable, there’s uncertainty about the outcome of your application until it’s submitted. While a positive credit score is generally advantageous, it’s important to note that negative marks on your credit report can have a prolonged impact.
If your application is declined by Telstra, Optus, or Vodafone, or if your credit history is less than ideal, it doesn’t necessarily mean that you can’t get a new phone or service plan.
For individuals in Australia with poor credit, there are alternative options to secure a phone plan:
Prepaid plans are an excellent choice for individuals with poor credit or those who want to avoid credit checks altogether. With prepaid plans, you pay for services in advance, so there’s no need for a credit assessment. These plans offer flexibility and allow you to control your spending while still accessing mobile services.
Prepaid phone plans typically offer a variety of features, including:
PAYG plans are another alternative for those with poor credit. They work on a “pay-as-you-go” basis, where you only pay for the services you use. There’s no contract or credit check involved, making it accessible to a wide range of individuals.
Pay-as-you-go options typically offer a variety of features, including:
Family plans are an option if you have family members or close friends with good credit. Under a family plan, multiple individuals can share a single account, and the primary account holder’s credit is typically the one considered for approval. This can be a way for individuals with poor credit to access phone services by joining a family plan with a creditworthy family member.
Securing a phone plan in Australia involves various factors, with credit scores being a significant but not exclusive determinant of approval. Factors such as income, employment status, payment history, and available alternatives like prepaid plans, pay-as-you-go options, cosigners, and family plans can provide pathways for individuals with varying credit backgrounds to access mobile services.
Understanding these factors and exploring alternative options is essential for making informed choices that suit individual financial situations and communication needs. It’s crucial to consult specific providers for their unique criteria and explore options that align with your circumstances to stay connected in the increasingly interconnected world of mobile communication.
While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.
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