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T-Mobile wants to offer you a deal despite your credit score

The carrier's "Smartphone Equality" initiative is meant to reward customers who pay their bills on time with deals ordinarily available only to those with solid credit.

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T-Mobile CEO John Legere has a new program to lure in customers with poor credit. YouTube/screenshot by Lance Whitney/CNET

T-Mobile is trying to reel in more smartphone customers through a new program that doesn't care about your credit score.

In a blog post and video issued Thursday, T-Mobile CEO John Legere described what he called "one of the wireless industry's dirtiest little secrets." Even as mobile carriers trot out deals with zero-down offerings, free phones and low-cost installment plans, Legere said, people with poor credit are shut out.

T-Mobile wants to include those with low credit through a new program it calls "Smartphone Equality."

The bid to win over those consumers is yet another example of wireless players searching for new areas of growth. T-Mobile has been particularly successful in stirring the pot -- Consumer Intelligence Research Partners said that, in a survey this month, T-Mobile scored the highest percentage among major carriers in terms of winning over new customers and retaining existing subscribers.

Verizon, meanwhile, said Thursday that in the fourth quarter of 2014 its customer turnover rate spiked, an increase in defections that came amid aggressive offers by T-Mobile and Sprint.

While the carriers beat each other up over the most affluent consumers, who typically sign contracts and pay for more expensive plans, there is a large pool of lower-credit quality customers that has largely been ignored and shut out of the best deals.

"The fact is that 63 percent of Americans have a less than the perfect credit score," Legere said in his blog. "Which means that more than half of all Americans are denied the best deals. They either have to fork over more cash -- both upfront and over time -- or walk out the door empty-handed."

Starting January 25, Smartphone Equality will offer the same deals to all customers whether or not they have a good credit score, and will apply to both prepaid and postpaid subscribers. Such deals include zero-down on popular smartphones with no interest and no credit check. A customer with poor credit typically has to pay a significant amount upfront to buy a smartphone.

"If you've been loyal to us, we'll put your relationship with us ahead of your credit score," said Andrew Sherrard, a marketing executive for T-Mobile.

The only catch? T-Mobile subscribers have to have made 12 straight monthly payments on their current plan without any interruption in order to qualify for the best prices and deals. If a customer is more than two days late or outright misses the payment, the clock resets for another 12 months.

"Smartphone Equality is an example of a plan which both serves growth objectives while being well grounded in good financial sense," said Jan Dawson, an analyst at Jackdaw Research.

Sherrard declined to comment on how many customers qualified under the program, but said it was a material number.

T-Mobile argues that the move is financially beneficial because customers who have been able to make 12 straight payments on time are as reliable -- if not more -- than the typical "well-qualified customer."

"The simple truth is that our relationship with that customer is actually a better predictor of future behavior than their credit history," Legere said.

-Roger Cheng contributed to this story.