Are guaranteed mobile phone contracts here to stay?

When guaranteed mobile phone contracts became a constant feature in the UK few years ago, pundits were quick to point out that it won’t last. The thinking back then was that there was no way providers could sustain a plan that ultimately put them at risk of making losses due to anticipated defaults. However, it seems the critics of guaranteed mobile phone contracts have had to eat humble pie as the popularity of these types of contracts continue to soar every single passing day.

The fallacious reasoning prior to the launch of guaranteed mobile phone contracts was that having a poor credit rating was a direct consequence of financial mismanagement and irresponsibility. For long, this was the agreed concept and lenders and mobile phone providers in the UK and beyond the borders had nothing to do with those with a poor credit rating. Any application emanating from a person with a less than average credit rating was given just one glance and dumped into the dust bin.

The financial crisis of 2008 that brought many countries economies to their knees as well as plunged individuals into debt seems to have been the catalyst that led to a change of heart. Suddenly, mobile phone providers realized that if they kept up their hard stance as regards credit scores, then they might as well find themselves with no customers. Companies closed shop and it was not unusual for governments to bail out companies that initially were a force to reckon with pre-global credit crunch of 2008.

The dye had been cast and mobile phone providers in the UK in their attempt to stay afloat and romp in more customers began rolling out guaranteed mobile phone plans as well as bad credit mobile contracts. The idea was to create mobile plans designed for individuals whose credit score had suffered a beating. Guaranteed mobile phone contracts were launched with pomp and fanfare and gave respite to the thousands of UK citizens who hitherto had not been able to snag a mobile phone contract due to a poor credit rating.

While naysayers were quick to point out that the act was merely a stop gap measure with no long term commitment, it seems as if, after all, guaranteed mobile phone contracts are here to stay. For starters, these contracts are not designed for individuals with a poor credit rating per se.

Those with no prior credit history have also found guaranteed mobile phone contracts a great launching pad to that good credit score that will enable them get access to better phone deals as well as loan products. Add to that the fact that guaranteed mobile phone contracts have given those with a poor credit rating an opportunity to rebuild their credit report and you get to understand why guaranteed mobile phone contracts are going nowhere but here to stay. In any case, the sole belief that companies offering guaranteed mobile phone contracts set themselves up for losses is a fallacious so to speak. In most instances, such providers require that applicants pay a small upfront payment as a sign of commitment. This small upfront deposit is of course refunded at the expiry of the contract provided that the applicant meets their contractual obligation. In light of all this, we can unequivocally say that guaranteed mobile phone contracts are here to stay!