To get the best deal possible on any new phone, there's one straightforward thing you can do: Work on getting your credit score up. "If your credit report isn't it good shape, you may have to pay more," Rod Griffin, director of consumer education and awareness at Experian, tells CNBC Make It.
Many people don't know that your score can also affect your cell phone bill. "Credit reports are used for a lot more reasons than people realize," says Griffin.
If you have poor credit, you may be required to make a large down payment when you purchase your phone, Griffin says. You could also miss out on favorable deals only available to "qualified customers" with good credit. Nearly a third of the respondents in WalletHub's 2018 Credit Scores & iPhone Launch Survey didn't even realize cell phone companies perform credit checks.
Apple just unveiled its newest iPhones and their starting prices: The iPhone XR will cost $749, while the iPhone XS will go for $999 and the iPhone XS Max for $1,099. The iPhone Upgrade Program lets you pay off the phone monthly with the option to upgrade again after 12 months, but the program is only open to those with credit scores good enough to qualify.
Opting to enroll can technically be more expensive. The cheapest, 64-gigabyte iPhone XS Max costs $54.08 per month so, after 24 months, that adds up to nearly $1,300, or about $200 more than the $1,099 you would have paid upfront. But for many consumers the upgrade program offers a sweet deal. It includes damage protection through AppleCare+ and, if you decide to upgrade again after a year of making monthly payments, you'll be getting a new phone after only having paid about $650 for the XS Max, or around half its full cost.
If you're thinking of getting any new phone, prepare yourself for a credit check by improving your score as much as you can. Your score is calculated based on payment history, how much you owe, your length of credit history, the types of credit you have and how often you apply for new credit. "If you pay your balances on time and keep your balances low, you're going to have good scores, because everything else builds on those two factors," says Griffin.
Your credit score, which is based on your credit report, is a measure of how trustworthy you are to a lender. As many people know, a very good score, one of 750 or above, qualifies you for better mortgage and auto loan rates. It also gives you access to the best credit cards.
Griffin recommends checking your report at least once a year, which is free and will not damage your score (the idea that monitoring your score hurts it is a common misconception). "You can't do anything about your credit report until you know what's in it," says Griffin. "If there's something you need to address, take action."
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