Does Financing a Phone Build Credit?

Sometimes—but not always.

Financing a phone can help build credit only if the account is reported to the credit bureaus and you pay on time.

Many regular phone plans aren’t reported like a loan, but missed payments can still end up in collections and hurt your score.

Using KOHO Essential to Support Your Credit

If you want more control over your money and a clear way to work on your credit, with KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

When Financing a Phone Can Help Your Credit

Phone financing may help your credit if:

• The device financing is treated like a loan or installment plan

• The lender or carrier reports that account to the credit bureaus

• You make every payment on time

In that case, your phone plan behaves a bit like a small loan: regular on-time payments can be a positive signal on your report.

When It Doesn’t Build Credit (But Can Still Hurt)

In many setups:

• Your monthly plan isn’t reported as a traditional trade line

• Paying on time doesn’t visibly boost your score

• But if you don’t pay and the account goes to collections, that negative mark can show up and drag your score down

So, financing a phone is not a guaranteed way to build credit—but mishandling it is a very real way to damage it.

A Cleaner Way to Build Credit

If your goal is specifically to build or rebuild credit, relying on a phone plan alone is risky and unclear. A clearer path is to:

• Keep your phone bill paid on time

• Create a budget and avoid missed bills

• Add Credit Building so you know you have a dedicated credit-building tool working in the background

That way, your credit growth isn’t just a side effect of a phone contract—it’s something you’re actively and predictably working on.