Can You Lease a Smartphone with No Credit or Bad Credit?

With regular improvements and updates in smartphone technology, one of the best ways to take advantage of the changes is by being ready to change phones in less than the typical two years that are required for smartphone financing arrangements.

With leases, you can change phones in as little as one year.

But can you lease a smartphone with no credit or bad credit?

Leasing Mobile Devices and Your Credit

Whether you lease or finance a smartphone, it's still a credit arrangement.

As is always the case:

The best deals and terms will be for those who have the best credit.

But can you lease a smartphone with no credit check or bad credit?

As new mobile devices come out, carriers are more anxious than ever to move customers into the latest and greatest versions.

When you finance a phone, you're locked in for the term of the loan.

That's usually at least two years.

Generally speaking, leasing payments will be lower than financing, because they don't require payment of principal.

However, if you take an early upgrade option, which allows you to get out of the lease early, the monthly payment can be higher.

As is the case with all financing arrangements, the best terms are always for those who have strong credit. But that doesn't mean you can't get a smartphone lease with no credit or bad credit.

Many smartphone carriers offer lease arrangements for people with no credit or bad credit.

They may limit the phones you can buy, and in some cases, the lease arrangement may be handled through a third party.

Cell Phone Services Offering Smartphones with No Credit or Bad Credit

There are several smartphone service providers that will allow customers to lease a smartphone with no credit check or bad credit. Those include:

T-Mobile

T-Mobile offers its T-Mobile One plan with no credit check.

It's available to anyone activating at least two voice lines, the third voice line can be added with a family plan, as well as a fourth voice line free after monthly bill credits. Available for new and existing customers.

You don't have to pay more for this plan than for one with a credit check.

The Smartphone Equality program enables you to get the best pricing on T-Mobile smartphones regardless of your credit score.

But you'll have access to the best pricing if you pay your T-Mobile bill on time for 12 consecutive months.

Cricket Wireless

Cricket Wireless allows leases with no credit check through Progressive Leasing.

You must have an active checking account, a debit or credit card, and pay at least $149.99 for the first phone (you can lease up to five phones) with an initial lease payment of $49.99.

The deals are lease-to-own arrangements.

Gazelle

Gazelle offers plans for both bad credit and no credit.

The plan applies to refurbished cell phones on the site, including most major brands.

No deposit is required.

Financing is provided through “Affirm”, which does a soft credit check. Depending on your credit, they will allow you a term of three, six or 12 months, at interest rates ranging from 10% to 30%.

MetroPCS

This company has lease plans available without a credit check requirement.

However, the criteria is a bit stiffer than some other carriers.

For example, you must be able to prove you earn at least $1,000 per month. You must also have an active debit or credit card.

The plan works with SmartPay and is available for most major phones. A credit check can be performed at your option and may result in better lease terms.

Get Better Lease Terms and More Options

If you’re finding yourself shut out of the best smartphone deals, or a particular phone you especially want, improving your credit may get you where you want to be.

The process of improving your credit can take anywhere from a few weeks to a few months, depending on the specific improvements needed.

But to get the process rolling, try the following:

• Order a copy of your credit report from each of the three major credit bureaus. You can get them for free at a site called AnnualCreditReport.com.
• Review the report line by line, looking for any possible errors.
• If you find errors, dispute them with the individual creditor. Be ready to provide documentation supporting your claim.
• If there are any past due balance is, like collections or charge-offs, pay them as soon as possible. They'll still show up on your credit report, but a paid collection is better than an open one.
• If you have high balances on credit cards, or you have too many open accounts, gradually begin paying some off, or at least down. This will improve your credit utilization ratio, which is a major factor in calculating your credit score.
• Plan to monitor your credit score on a regular basis, so you can track your progress or spot future errors. There are several ways you can monitor your credit for free.
• It should go without saying that you must make all future payments on time.

Some of these strategies will improve your credit quickly, such as disputing errors and paying off past due balances.

Others, like paying down or paying off credit cards, may take several months.

How to Build Credit if You Have No Credit

Though there are ways you can lease a smartphone with no credit, you can begin building your credit and credit score now, to expand choices in the future.

There are three ways you can do this:

1. Secured credit cards

Basically, you put up a security deposit, typically $200 to $300, though it can be more.

You’re given a secured credit card with a matching credit limit. You use it just like a credit card, and the lender reports your payment history to the credit bureaus.

It will generally take at least six months before you begin building a credit score.

2. Credit builder loans

These work on the same principle as secured credit cards, except it's an actual loan. Credit builder loans are also commonly available with banks and credit unions.

You open a savings account with say, $1,000. You’re given a matching loan amount, though no money actually changes hands.

Instead:

The monthly payments on the loan are withdrawn from your savings account each month. This ensures payments are made on-time automatically.

At the end of the loan term, both your savings account and the loan will have a zero balance.

Once again, your payment history will be reported to the credit bureaus, helping you to build a score.

3. Get a loan with a cosigner

Since you have no credit score, lenders will be unlikely to approve a loan for you in your own name alone.

But by adding a cosigner with a strong credit history, the same lender may issue an approval. Make your payments on time each month, and you’ll begin to build a good credit history.

Any of these methods will take anywhere between six months and 12 months to establish a credit score. But you've got to start somewhere, and it's best to start now if you have no credit at all.

Do Smartphone Leases Improve Your Credit?

Unfortunately, there's something of an imbalance when it comes to smartphone payment plans.

The phone services will not report good credit history to the credit bureaus. That means your good payment history will not help your credit or your credit scores.

That's ironic since virtually any loan or lease arrangement is a formal financing situation, which normally is reported to the bureaus.

But smartphone companies follow the pattern of utility companies in not reporting regular monthly payments.

On the flip side:

If you fail to satisfactorily complete your payment plan, and there's an unpaid balance at the end of the term, that information will be reported. Naturally, it will show up as a negative entry on your credit report, and hurt your credit score.

There is a bit of good news:

Since smartphone companies don't report your payment history, they also don't report late payments.

It only becomes an issue if you are late enough to be considered in default. That may range from 60 days late to 90 days late, depending on the carrier. No small number of consumers have been hit by negative credit entries as a result of unpaid payments and early termination fees.

If you want your smartphone payments to be reported to the credit bureaus, a workaround is to pay for the phone using a credit card. Your monthly payments will be reported to the credit bureaus, which can help improve your credit score.

What Is the Difference Between Lease and Finance?

The primary difference between leasing and financing a smartphone is the end result.

With a lease, you typically return the smartphone at the end of the lease term.

That frees you up to move on to a different phone. That can have the advantage in that smartphones are upgraded regularly, and you may want to be in a position to make a change after just one or two years.

When you finance a smartphone, you're making payments with the ultimate goal of owning the device outright.

It has the advantage that once the loan is fully paid, you will own the device free and clear. That will enable you to either sell the phone and buy a new one, or even trade it in for the latest upgrade.

However, the difference between leasing and financing a smartphone isn't always clear. Many leases are established with the ultimate purpose of enabling you to own the phone at the end of the lease term.

Whether you finance or lease your smartphone, the terms and options will be better if you have stronger credit.