Does Cancelling a Cell Phone Plan Hurt Your Credit Score

Even if you cancel your cell phone plan, pay outstanding balances on time.

Even if you cancel your cell phone plan, pay outstanding balances on time.

Regardless of why you cancel your cell phone plan, the cancellation itself will have no bearing on your credit score. There are ways, however, that oversights and mistakes you make after you hang up the plan can affect your score. For example, 35 percent of your credit score reflects your payment history. If you cancel the cell phone plan, then pay late or forget to pay, it will be a ding on your credit score.

Credit Reporting

You may have bought that cell phone to help establish your credit, but most cell phone companies don't report your timely payments to the bureaus. They only report the untimely payments. This means paying your cell phone bill each month does nothing to boost your credit. However, if you cancel your cell phone plan, you could run the risk of adverse reporting if you have an outstanding balance that you pay late.

Outstanding Bill

If you are planning to cancel your cell service, do it on the last day of the billing period. If you wait until the next billing period starts, there will be an additional bill to pay, even if it is only for one day. You may only owe $5, but they will send a bill for it a month after you have cancelled your service. If you do not pay that bill on time, the cell phone company will reported as a late payment, or worse, send it to a collection agency. Both actions will lower your score.

Cancellation Fee

The cancellation fee is another charge you must pay on time. It can be hefty, depending on how much time is left on your contract. Most companies prorate these charges, but they must be paid in addition to the bill for your last month of service. This will also be reported if not paid on time.

General Advice

When you call to cancel your contract, ask the customer service representative how much you currently owe, if any charges are forthcoming on subsequent bills and, if so, how much they will be. Armed with this information, you can determine if you have sufficient funds to cancel the card at that time. If you don't, and your carrier prorates the cancellation fee, you can calculate at what point you can afford to cancel. Switching to a less expensive plan to make the numbers work for you is certainly an option, but have the customer service representative confirm this will not extend your contract.

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