How Your Cell Phone Can Affect Your Credit

OCT 14, 2011

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In 1995, just 13 percent of the U.S. population had cell phones according to the International Association for the Wireless Telecommunications Industry (CTIA). By December 2010, that rate had soared to 96 percent, and in 2010, Americans racked up 2.2 trillion minutes of air time on their mobile phones, CTIA reports.

If youve got a mobile phone, then youre probably aware that your credit affects how easily you can get a cell phone. If your credit score is below average, many companies require you to pay an extra deposit. You may not be aware, however, how cell phone plans affect credit.

First, when you apply for a cell phone, the carrier will check your credit. Credit report inquiries  appear on your credit report. Too many inquiries over a short time could lower your credit score. Do some comparison shopping for a cellular plan, before you make a formal application, so the only company checking your credit report is the one you end up doing business with.

Your payment history is one of the top factors that affect your credit score. If youre late in paying your cell phone bill, your mobile provider may report your late payment to the credit bureaus. Late payments remain on your credit report for about seven years.

If you routinely go over your allotted minutes each month, and rack up excessive overage charges, you may be tempted to use your credit card to pay your bill. Increasing your credit card debt  can adversely affect your ratio of credit available to credit used, another key factor credit bureaus use in determining your credit score.

Cell phones have become an integral part of American life, with 65 percent of adults admitting that they sleep with their phone on or right next to their beds, according to Pew Research. Understanding how your cell phone plan affects your credit, may help you rest easier.