4 Ways Your Cellphone Could Wreck Your Credit

Your cellphone: It’s hard to live without! (How did we ever get by with a landline in the “olden days”?) And cellphones are really more than cellphones — they’re mobile devices that have become our cameras, our entertainment devices, our way to connect socially, our shopping malls, our sources of news and information and our banking machines. Sometimes we even remember to use them to talk to people!

But your phone is poised to destroy your credit if you’re not careful. Here are 4 ways you’re at risk (and what to do about it).

1. Watch Your Phone Bill Carefully

I get my phone bill emailed to me every month, and I pay it on time. One month, the email didn’t come. (Did the phone company forget? Did it end up in my spam folder? Who knows?) Fortunately, I have my bills scheduled on a calendar, so I knew it was supposed to arrive even though it didn’t. I signed into my phone account, got the amount, and paid it. But I’m organized and ready in case that happens, not everyone else is. Make sure you know when your phone bill is expected, so you don’t miss a payment (or two). Those unpaid bills could ultimately wind up in collections, and that could really hurt your credit.

2. Monitor Your Usage

Do you know what your plan covers and what it doesn’t? Certain habits — like constant movie streaming — can put you over your data limits and saddle you with a big bill for hundreds or even thousands of dollars. To avoid racking up debts related to data overages (which can impact your credit), make it a habit to track your usage once a week. It generally only takes 15 seconds to quickly check and see how you’re doing for the month (and some phones allow you to limit your usage above a certain point).

3. Be Careful of What Apps You Download

Apps require us to give them permission to access certain information. And it’s easy for overly-trusting people to overlook exactly how much information they’re allowing an app to take. Your app may have access to a lot of your personal information. And breaches of their systems could leave you vulnerable to identity theft, which can severely impact your credit. That’s why it’s a good idea to read privacy policies carefully before downloading an app so you know what data is being collected, how it’s protected and whether it gets shared with any third parties.

Plus, from time to time you’ll hear a story of a parent who gave their phone to a child to play with only to have that child inadvertently put thousands of dollars of app-related charges on the parent’s credit card, which can hurt your credit utilization (the amount of debt you’re carrying versus your total available credit) and your payment history, if you miss the bill.

4. Be Wary of What Information You Save in Your Phone

Not only are apps accessing information, you store a lot of information in your phone. If you leave your phone somewhere, then someone else could access a lot of that information. From your personal information to bank accounts (if you do your banking on your phone) to stored credit cards, your phone is an identity thief’s dream! At the very least, it’s a good idea to lock your phone and download a tracking app so you can find it if it goes missing. And, if you ever have reason to believe your phone and the personal or financial data on it was compromised, you should monitor your accounts and your credit. (A sudden drop in credit scores, for instance, is a sign identity theft is occurring. You can view two of your scores for free each month on Credit.com.)

The truth is, I’d be totally lost without my phone! I use it to manage my social life and stay connected with my employees. But I’m very careful about my phone because it’s a potential credit hazard that could destroy my score.