I have now passed my minimum term of 24 months on my current contracts (2 phones) and am due upgrades. I browsed the website to see what was around and then called customer services to arrange the upgrade. Tarriffs and handsets were discussed and I was happy to proceed with the upgrades, only to be told I had failed the credit check for the freestyle handset part of the contract but was eligible for a sim-only deal.
As a long term customer who hasn't missed any payments, and not looking for a flagship phone with a highend tarriff I was disappointed as the last upgrade was very straightforward and completed in a single call in less than 20 minutes.
The frustration lies with the fact that I was told I failed the "affordablility check". I have Virgin Media services with which I have never missed a payment too, I have a £50 credit limit on both accounts and my bills individually are never more than £15 but now I am not eligible for an upgrade to 2 new modest phones/deals totalling less than the existing credit limit on 1 of my existing contracts.
Having browsed the forum I believe this appears to be a common issue.
as you are now obviously aware, the new "freestyle" agreements are basically two separate agreements. One for the handset and the other for the airtime (mins, texts and data).
The handset agreement which is where you are failing is an interest free loan or credit agreement that is taken out over the period. As the agreement is a loan agreement then a credit check would have to be ran in line with the FCA guidelines.
Unfortunately loyalty/history with Virgin isn't the consideration as it’s your external credit file that would decide if you could pass for a loan or not.
Perhaps try one of the free online credit reports on yourself & see if it flags up any issues that you may be able to deal with to improve things.
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I forgot to add that I currently have a discount applied to my account too, I believe this will run until February but then my bill would rise beyond what an "upgrade" would be, making the upgrade more affordable than the current deal.