Is it worth paying more for a contract mobile phone for the credit score benefits? 25 February 2021 at 2:05PM in Credit file & ratings 6 replies 181 views

nogirrom

I am a soon to be university graduate and so i have starting thinking about ways to build my credit score. In researching a new mobile phone i have found that a contract option would be about £150 more expensive over 2 years than buying the phone outright with my current sim only contract. 
Overall does it seem worth the extra money for the potential to build my credit score? I am not currently interested in getting a credit card and so am just curious about the potential benefits of a mobile contract  

cymruchris

No - it's not worth it - as you should not be focused on your credit score. You should be focused on your credit history. A sim-only deal on contract that reports every month to the credit reference agencies will have the same impact as a fancy new phone contract. If you pay both on time - both would record as a communications supplier with the relevant positive payment markers. Have a read of the sticky in reference credit scores, in how they are a marketing tool, and although can be vaguely indicative of your level of credit history - they can also be wildly inaccurate and fly and up and down like the wind. 

Focus on getting a small number of credit accounts that report your payments - get yourself on the electoral roll -  and over time your history will demonstrate you are a good candidate for further credit when needed.

molerat

Some SIM only contracts report accounts.  From experience EE and Plusnet certainly do.

Jamesyb123

Your current account should report to the credit reference agency too. As others have said no need for an expensive contact a sim only will do.

Ebe_Scrooge

As above, the answer is a resounding "No".  Your score is entirely irrelevant, as no lender sees it.  You need to focus on building up a favourable history of borrowing and repaying - and there's absolutely no reason to be paying, either directly or indirectly, in order to do that.  Any line of credit will be recorded on your history.

I know you said you're not interested in a credit card - but it is one of the simplest ways of building up a history, so long as you understand how they work, and use it correctly.  Simply put, use it for everyday spending, things you have to buy anyway (food, travel costs, etc.), pay the statement off in full every month without fail when it arrives.  You don't need to spend large amounts on it - just using it for your regular food shop is enough.  There's no reason not to use a credit card, you just need to appreciate that it's not "free money" - only spend what you can afford, and make damn sure that you're able to pay the full balance every month (setting up a Direct Debit for the full amount means you don't have to worry about forgetting to pay).

DCFC79

In answer to the thread title no you dont need a mobile phone on contract.
Get an Aqua or Capital One credit card and use it for petrol or a shop once a week.

Your score is neither here nor there since lenders dont see it, only you can see it, lenders/banks etc see your history.

PRAISETHESUN

There's no need to pay to improve your credit history (notice I said history, not score). If you find a phone contract that suits your needs that is fine, but don't take out a plan if you don't need it. I'd recommend looking into getting a CC to be honest if you're looking to improve your credit history. Use it in place of your planned debit card purchases and pay it off in full every month. Not only will you not pay any interest by paying the balance off in full, you will be building up credit history doing things you would already be doing anyway.