How do phone & internet bills affect your credit score?
While most people may be aware that taking out a personal loan or credit card can affect your credit score, it is less widely known that telecommunications services such as mobile phones and broadband contracts can also have an impact.
When you apply for a post-paid mobile phone contract, you are applying for credit and the telco can do a credit check on you. This will show up on your credit report as a credit enquiry (regardless of whether your application is approved or not) and can impact your credit score.
Remember that credit providers look at multiple enquiries in a short period of time as an indication of increased risk, so only apply for credit if and when you need it. It’s also a good idea to monitor your credit score and credit report to make sure you’re in good shape before making any applications.
If you do have a mobile phone contract, it is essential to pay your bills on time to maintain your credit score. An unpaid bill can be listed on your credit report as a default if your payment of $150 or more is overdue by 60 days or more and this record will have a negative impact on your credit score.
In today’s mobile saturated society, a less common way that your phone bills may have a negative impact on your credit score is landlines in share houses.
Consider a share house tenant who takes out a landline contract, or probably more common these days a broadband contract.
If the contract-holding tenant moves out and leaves their remaining housemates to look after the bill, any defaults will still be attributed to the tenant who has moved out, which could cause ongoing problems if not identified and rectified.
One way to avoid these types of problems is to use pre-paid mobile and broadband plans. Today there are many competitive pre-paid plans in the market and you only pay for what you need upfront for the month.