Does Cancelling a Cell Phone Plan Hurt Your Credit Score

Regardless of why you cancel your cellphone 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 cellphone plan, then pay late or forget to pay, it will be a ding on your credit score.

TL;DR (Too Long; Didn't Read)

While canceling your cell phone plan alone does not harm your credit score, you'll see a negative impact if you don't pay your final phone bill on time or if your account goes into collections.

Credit Reporting for Late Payments

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

Paying Your 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 canceled your service.

If you do not pay that bill on time, the cellphone company will be reported as a late payment, or worse, send it to a collection agency. Both actions will lower your score.

Paying Your 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.

Advice on Canceling Your Service

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 phone 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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