Can I Get a Phone Plan With Bad Credit in Australia?

Quick Answer: Yes — getting a phone plan with bad credit in Australia is possible, but your options depend on the type of plan. Postpaid phone plans (with a handset repayment contract) are harder to get with an active default on your credit file. SIM-only plans and prepaid plans generally don't require a credit check. If a telco default on your file was listed unlawfully — a very common occurrence — removing it under the Privacy Act 1988 restores full access to postpaid plans and has broader benefits for your overall financial file.

Getting knocked back for a phone plan on top of everything else feels petty. It's not — telcos extend credit when they give you a handset on a monthly repayment plan, which means they check your credit file. But there are options, and the issue is often fixable faster than you'd expect.

What Phone Carriers Check in Australia

The major carriers — Telstra, Optus, Vodafone — run credit checks for postpaid plans with handset repayments. Smaller MVNOs (Boost, Amaysim, Lebara, Circles.Life) generally don't run credit checks for SIM-only plans or have lighter credit criteria.

Your Options With Bad Credit

Prepaid is the immediate, no-barrier solution. Plans from Boost, Amaysim, and others offer genuinely good value — unlimited calls and texts, fair data allocations — without a credit check. The only limitation is you pay upfront and don't receive a subsidised handset.

BYO device + SIM-only plan from a major carrier may still pass a credit check if the only concern is a single older default, since you're not entering a device repayment contract. Worth trying with Vodafone or Optus before assuming you'll be declined.

Add-on to a family member's plan — some carriers allow additional lines on an existing account. If a family member has a clean credit account, you may be able to be added without a separate credit check.

Credit repair — if the issue is a telco default specifically, this is where things get interesting.

The Telco Default Loop — and How to Break It

Here's the irony many people don't know about: the most common source of defaults in Australia is telecommunications companies. Telstra, Optus, and Vodafone list defaults regularly — and often improperly.

The two most common unlawful listing scenarios:

No Section 21D Notice: Before listing a default, a credit provider must send a written notice giving you 30 days to respond. Many telcos, particularly in the prepaid-to-postpaid transition period, skip this step.

Listed During a TIO Complaint: The Telecommunications Industry Ombudsman (TIO) handles telco complaints. If you lodged a complaint about a billing dispute, and the telco listed a default while that complaint was open, the listing breaches the Credit Reporting Code.

Both are grounds for removal under the Privacy Act 1988. And removing a telco default doesn't just fix your phone plan access — it lifts your score broadly, which improves your position for home loans, car finance, and credit cards.

Real Case Study: Marcus, Townsville — Telstra Default Removed in 24 Days

Marcus, 27, a hospitality worker from Townsville, had been declined by both Telstra and Optus for postpaid plans. He was on prepaid but needed a new handset and wanted to spread the cost. His Equifax score was 509.

His credit file showed a $340 Telstra default — from an account that had been cancelled when he moved interstate. He had records showing he'd contacted Telstra to cancel, been told the account was closed, then received a default notice months later with no Section 21D pre-listing warning in between.

ACS assessed the listing. The absence of the Section 21D notice was confirmed. We challenged the listing on that ground.

Telstra removed the default on day 24. Marcus's Equifax score moved from 509 to 641. He applied for a postpaid plan with Optus the following week and was approved.

Result: Marcus's Equifax score moved from 509 to 641 in 24 days. Default removed. Postpaid plan approved. He paid only when we succeeded. Subject to individual assessment; results may vary.

Step-by-Step: Getting a Phone Plan With Bad Credit

1. Start with prepaid — no credit check, full functionality while you sort out the underlying credit issue
2. Pull your Equifax credit report — confirm what's on your file and what carriers will see
3. Get a free credit assessment — if a telco default exists, find out if it has removal grounds
4. If removable, pursue credit repair — 30–90 days for a full file clearing
5. Try SIM-only first — once credit improves or default is removed, start with a SIM-only plan to rebuild trust
6. Then graduate to postpaid with handset — once your file is clean

Frequently Asked Questions

Does getting a phone plan affect my credit score in Australia? Applying for a postpaid plan with a handset creates a hard enquiry on your credit file, which can slightly reduce your score (typically 5–30 points). If you're declined and apply at another carrier, each attempt adds another enquiry. Prepaid plans don't create enquiries.

Can a telco default be removed from my credit file? Yes — if it was listed unlawfully under the Privacy Act 1988 or Credit Reporting Code. Missing Section 21D notices and defaults listed during active TIO complaints are very common grounds. See our detailed guide on removing a Telstra default from your credit file.

How long does a telco default stay on my credit file in Australia? 5 years from the listing date — regardless of whether you pay the debt. It does not reset when paid. Professional removal under the Privacy Act 1988 is the only way to clear it before the 5-year expiry.

Which phone carriers don't do credit checks in Australia? Most MVNOs (Boost, Amaysim, Lebara, Circles.Life, Woolworths Mobile, Aldi Mobile) offer SIM-only prepaid plans with no credit check. Postpaid plans from major carriers (Telstra, Optus, Vodafone) with handset repayments will include a credit check.

Will a telco default affect my home loan application? Yes — significantly. An active default from any source, including a telco, appears on your credit file and will trigger automatic declines from mainstream lenders. Removing it restores your eligibility for mainstream home loan rates, which can represent hundreds of thousands of dollars in interest savings over a 30-year term.

Can I dispute a telco default myself? Yes — you have the right under the Privacy Act 1988 to dispute your own credit file directly. The challenge is knowing what legal grounds apply and how to document the case effectively. ACS handles this professionally with a No Win No Fee model — you pay only if the default is removed.

Is a Telco Default Holding Back More Than Your Phone Plan?

A default from a telco affects your entire credit file — not just your ability to get a phone plan. It can block home loans, car finance, personal loans, and even rental applications. If the listing was unlawful, a free assessment from ACS tells you in 24 hours.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians remove unlawful defaults since 2014. No Win No Fee. 98% success rate on accepted cases.

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Remove a Telstra Default → | Default Removal Services →