Credit Checks and Ideal Credit Scores When Applying for a Phone Plan

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:

• Credit Score FAQs
• Credit Scores in Australia, How Do They Work?
• How to Check My Credit Score in Australia?

Applying for a Phone Plan in Australia

Telstra

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.

Benefits of Telstra Upfront Plans

• No credit check required
• Month-to-month plans
• Data sharing between up to 10 services
• 5G network access
• Unlimited talk and text Australia-wide
• 30 minutes of international calls
• Unlimited SMS to standard international numbers
• Access to the Telstra Plus rewards program
• The option to bundle up to five plans

Telstra Upfront Plan Options

• Basic Upfront SIM Plan: $62 per month for 50GB of data
• Essential Upfront SIM Plan: $72 per month for 180GB of data
• Premium Upfront SIM Plan: $75 per month for 300GB of data

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.

Optus

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 Prepaid Plans

• Optus Flex Plus – Prepaid $12 Recharge: 5GB Data, Per 7 Day Renewal
• Optus Flex Plus – Prepaid $35 Recharge: 40GB Data, Per 28 Day Renewal
• Optus Flex Plus – Prepaid $45 Recharge: 60GB Data, Per 28 Day Renewal
• Optus Flex Plus – Prepaid $55 Recharge: 80GB Data, Per 28 Day Renewal
• Optus Flex Plus – Prepaid $160 Recharge: 120GB Data, Per 186 Day Renewal

Optus Postpaid Plans

• $49 Optus Choice Plus Plan: 30GB Data, No Contract
• $59 Optus Choice Plus Plan: 100GB Data, No Contract
• $89 Optus Plus Promo Plan: 500GB Data, No Contract
• $69 Optus Choice Plus Plan: 220GB Data, No Contract
• $89 Optus Choice Plus Plan: 360GB Data, No Contract

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

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 SIM-Only Plans

• $45 Small SIM Only Plan: 80GB Data, No Contract
• $55 Medium SIM Only Plan: 300GB Data, No Contract
• $65 Large SIM Only Plan: 600GB Data, No Contract

Vodafone Prepaid Plans (No Credit Check Required)

• $30 Prepaid Plus Recharge: 15GB Data, Per 28 Day Renewal
• $40 Prepaid Plus Recharge: 30GB Data, Per 28 Day Renewal
• $50 Prepaid Plus Recharge: 45GB Data, Per 28 Day Renewal
• $60 Prepaid Plus Recharge: 60GB Data, Per 28 Day Renewal

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.

The Ideal Credit Score Range for Various Types of Phone Plans

Postpaid Phone Plans

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

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

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.

Factors Influencing Phone Plan Approval

Phone plan approval in Australia is influenced by various factors beyond just credit scores. It’s essential to consider these additional aspects:

Income and Financial Stability

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.

Employment Status

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.

Payment History

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.

Security Deposits

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.

Proof of Identity and Residency

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.

Outstanding Debts

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.

Plan Type

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.

Age and Legal Capacity

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.

Alternative Options for People with Poor Credit

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 Phone Plans

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:

• Unlimited calls and texts
• Data allowances
• International calling
• SMS and data packs

Pay-As-You-Go (PAYG) Options

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:

• Local calls
• Text messages
• Mobile data

Family Plans

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.

Additional tips

• Shop around: Compare prices and features from different providers before you choose a phone plan.
• Read the fine print: Be sure to read the fine print before you sign a contract for a phone plan. Make sure you understand the terms and conditions of the plan, including any fees or penalties.
• Ask questions: If you have any questions about a phone plan, don’t be afraid to ask the provider. They should be able to answer your questions and help you choose the right plan for your needs.

Conclusion

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.