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Cheap Talk: What Low or No Credit May Mean for Your Cell Phone

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For those with low or no credit, getting a traditional cell phone contract isn’t always easy. It’s possible for a cell phone customer to wrack up a monthly bill costing hundreds or even thousands of dollars, so cell phone providers typically run a credit check on prospective customers to minimize their risk.

But all isn’t lost if your credit doesn’t pass muster. Here’s a look at strategies for getting a cell phone even if you haven’t established a strong credit history or have red flags in your file.

Pay a large deposit. If you’re determined to get a traditional contract with a major carrier, you may need to cough up a deposit to give the carrier peace of mind. Cell phone customers report paying deposits ranging from about $200 to as much as $1,000, but these are sometimes negotiable if you have a good track record of paying a previous mobile carrier on time. Typically you would get this deposit back after a period of on-time payments, but make sure you understand how the deposit works before you sign up.

Get a guarantor. This is an especially attractive option for college students or recent grads who might be getting financial support from their parents anyway. Creditworthy parents or relatives could sign a cell phone contract on your behalf or allow you to join a family plan. Just be sure to have a conversation about who pays for overage charges so there are no surprises later on.

Use a prepaid plan. A growing number of consumers (even those without credit issues) are choosing prepaid or pay-as-you-go plans over two-year contracts. In fact, 76.4 million consumers had prepaid plans in 2012, up from 71.7 million the previous year, according to CTIA-The Wireless Association, the international trade group for the wireless telecommunications industry.

The prepaid option is “great for people who may want to control how much their usage is,” says Amy Storey, a spokesperson for CTIA-The Wireless Association. “Sometimes parents will choose this route for their kids so they can make sure that they are really staying within their limits.” Although prepaid plans don’t offer a subsidized phone, they also mean you won’t be locked into a two-year contract with hefty fees for breaking contract.

“The key is to … talk to the different providers and say ‘here is how I’m going to use my device,’” says Storey. “They’ll help you find the best service and product for you. Some of the prepaid plans may have different terms, so it’s important that the consumer understand how exactly the plan works.”

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