I'm on this now. I still have until October left on a second contract as well, as that was with O2 but wasn't O2 refresh.
I do like it but O2 aren't exactly the cheapest network anyway.
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Who here thinks a credit score check in order to get an iPhone is ridiculous?
- Thread starter DBZmusicboy01
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I'm on this now. I still have until October left on a second contract as well, as that was with O2 but wasn't O2 refresh.
I do like it but O2 aren't exactly the cheapest network anyway.
I know this thread has morphed from credit over to dealing with ETF issues. But I wanted to have input on the credit discussion.
Establishing and maintaining good credit is 1 of the most fundamentally important financial responsibilities that you have. Your credit will affect you for your entire adult life, and affect your ability to finance everything from a cell phone to a TV to a car to a house to a college education. I think most people realize that credit impacts getting access and financing for those assets.
However, what a lot of people do not realize is that good or poor credit also affects, for example:
1) Your ability to get a job. Yes, some employers do check credit in advance of making a job offer. Why? Good credit is an indicator of responsibility. Responsibility is an indicator of work ethic. Does good credit equal a good employee? Of course not. But it is an indicator that is used.
2) Your ability to get better car insurance rates. Yes, just like with getting a job, insurance companies evaluate credit worthiness in setting insurance premium rates. So you have have a spotless driving record and a modest car, yet still be strapped with a high premium because of your credit history. Again, goes to perceived responsibility.
3) The interest rates and terms you are offered on everything from a car loan to a house mortgage to a credit card rate. Most people do understand that. But I want to point out the impact. You very well might be able to go get a mortgage on that dream house. However, a 1% or 2% difference in what a bank will offer you on a mortgage based on your credit history can translate into hundreds of dollars a month and thousands of dollars a year.
It is a cycle. If you don't establish and maintain good credit, you will be charged more for credit, and you will not be able to get ahead of the curve. Everything becomes more costly, and you won't as easily be able to manage your debt. And your credit won't improve. And the circle goes on and on.
Relative to the discussion of companies checking your credit: dang right they can check your credit. They are running their businesses in a responsible manner and trying to avoid bad debt and the exorbitant cost of trying to collect on late payers. If a company gives out loans (or car insurance or cell phones, etc.) to people with poor credit, they lose money, and the company ultimately gets into a poor credit situation itself (see the above mentioned cycle).
If you are told you cannot finance something, take that as a positive. Walk away! Do without it at least for a while. Make a positive impact on your credit, and when you do want/need something down the road you will have the credit worthiness to support that purchase, and it will ultimately cost you less for everything you buy.
Establishing and maintaining good credit is 1 of the most fundamentally important financial responsibilities that you have. Your credit will affect you for your entire adult life, and affect your ability to finance everything from a cell phone to a TV to a car to a house to a college education. I think most people realize that credit impacts getting access and financing for those assets.
However, what a lot of people do not realize is that good or poor credit also affects, for example:
1) Your ability to get a job. Yes, some employers do check credit in advance of making a job offer. Why? Good credit is an indicator of responsibility. Responsibility is an indicator of work ethic. Does good credit equal a good employee? Of course not. But it is an indicator that is used.
2) Your ability to get better car insurance rates. Yes, just like with getting a job, insurance companies evaluate credit worthiness in setting insurance premium rates. So you have have a spotless driving record and a modest car, yet still be strapped with a high premium because of your credit history. Again, goes to perceived responsibility.
3) The interest rates and terms you are offered on everything from a car loan to a house mortgage to a credit card rate. Most people do understand that. But I want to point out the impact. You very well might be able to go get a mortgage on that dream house. However, a 1% or 2% difference in what a bank will offer you on a mortgage based on your credit history can translate into hundreds of dollars a month and thousands of dollars a year.
It is a cycle. If you don't establish and maintain good credit, you will be charged more for credit, and you will not be able to get ahead of the curve. Everything becomes more costly, and you won't as easily be able to manage your debt. And your credit won't improve. And the circle goes on and on.
Relative to the discussion of companies checking your credit: dang right they can check your credit. They are running their businesses in a responsible manner and trying to avoid bad debt and the exorbitant cost of trying to collect on late payers. If a company gives out loans (or car insurance or cell phones, etc.) to people with poor credit, they lose money, and the company ultimately gets into a poor credit situation itself (see the above mentioned cycle).
If you are told you cannot finance something, take that as a positive. Walk away! Do without it at least for a while. Make a positive impact on your credit, and when you do want/need something down the road you will have the credit worthiness to support that purchase, and it will ultimately cost you less for everything you buy.
Same here I was told AT&T needs to check with my credit history before buying my first iPhone. My friend wanted to get an iPhone from Verzion and he was told to pay a deposit because he had a history of bad credits.
Nothing in life is free. Either you are paying your way or someone else is. While you are still at home your parents pay. After you are an adult it is your responsibility.
I should not pay so that you can have a phone for free through taxes and neither should I pay more for my phone to make up for those who can't afford the latest model but just have to have it.
Life is about choices and trade offs.
I should not pay so that you can have a phone for free through taxes and neither should I pay more for my phone to make up for those who can't afford the latest model but just have to have it.
Life is about choices and trade offs.
If the carrier doesn't deal with phone subsidies at all it can be done. My carrier is not contracted but postpaid (your usage is calculated at the end of your cycle and then you pay for what you used) and they do not run credit checks. It's entirely possible to be successful postpaid without credit checks if one does not deal with subsidized phones.
You only have to go through a credit check when you first take out a contract with your carrier. If you pay your bills on time and maintain your account you will have no problems getting new phones.
It is far from stupid as there are too many people who feel like they are "entitled" and do not wish to pay. AT&T does not check your credit unless you are new to them and then I can't blame them.
It's only "stupid" because you, like many other people in this society today, feel like they NEED to have a smartphone. When most of us could very well manage with a feature phone.
Companies are free to charge what they want, you as the consumer don't get to decide that because the demand is so great, that the prices need to be lower. But you can decide not to use the service, and that's perfectly OK for these phone companies because it puts more money in their pocket, and cuts maintaining costs.
Credit checks prevent fraud. That's the #1 reason they're used when applying for credit cards, loans, and phone contracts.
Companies are free to charge what they want, you as the consumer don't get to decide that because the demand is so great, that the prices need to be lower. But you can decide not to use the service, and that's perfectly OK for these phone companies because it puts more money in their pocket, and cuts maintaining costs.
Credit checks prevent fraud. That's the #1 reason they're used when applying for credit cards, loans, and phone contracts.
Good stuff, do you have more reading materials on this topic? I'd like to read more into it to see what else it affects. Thanks.
The above all comes from experience.
In the case of insurance rates, I was actually very surprised by this. I was assisting my mother-in-law about 2 years ago with getting a new car and insurance coverage. The insurance quotes were astronomical: more for her for 6 months for a $6,000 used car than my wife and I pay combined for 2 $45,000+ vehicles for a full year. I questioned why, and it 100% had to do with credit history, not at all with driving record.
When it comes to what most people expect from good or poor credit, loan rates, it is often very apparent. What is your home's mortgage rate? What are your credit card rates? A new car rate might be 1-2% points higher for you than the person sitting at the desk next to you buying an identical car (and therefore $15-$50 more per month).
I was able to refinance my house a couple of years ago at a rate of 2.85%. Based on my old rate, and with paying the same monthly amount, I was able to reduce my re-payment term from about 15 remaining years down to about 11 remaining years. Again, same payment monthly, I was able to save about 4 years or 48 payments. Simply moving from 5.25% down to 2.85% ultimately will save me ~$50,000 within about 11 years, so about $4,500/year. That is potentially life...and retirement...altering. And, because of the lower rate, my principle balance is declining much more quickly, so every month I have more-and-more equity in my house.
Anyhow, in terms of research, I am sure you can easily seek it out online. Also, check out Experian (or freecreditreport.com) for more info as well.
The economy has nothing to do with credit scores. Your credit score won't automatically go down because of the economy. It takes a series of poor financial decisions to cause it to drop.
And that's exactly why they do credit checks. Would you loan someone $600 of your own money if they had a history of not paying loans back?
Low credit doesn't increase your monthly payment. It just increases your deposit.
Again, they just want to make sure you're going to pay back money loaned to you. And yes, a subsidy is essentially a 2 year loan.
Well, if by it's not like a car or house, you mean you can't drive it or live in it, yes, that's correct. But if by it's not like a car or a house, you mean it's not a loan, that's incorrect.
The phone is $600. You're proposing you pay $300. Where do you expect the remaining $300 to come from? If the carriers lose money from you, then they raise prices on the rest of us to cover the loss, and I don't want to pay for your iPhone.
Awesome, thanks for the input. Of all the thing I think the refinance part really caught my attention. Also just bought a awhile back, so I'll be keeping a close watch on the rate.
Sure thing. And those are just examples. Because of good credit...
1) Interest rates are lower and access to money is higher
2) Because rates are lower, monthly costs are lower on things like houses, cars, etc.
3) Because monthly costs are lower, you can afford more
There's that cycle I was talking about earlier. Strong credit is 1 of the most critical things you can do to improve your economic condition.
$6000 used car is prime for being torched to collect the insurance money. it also depends on where you live. there are parts of NYC where insurance will run you hundreds of $$ more than a few miles away
Sure, agreed. My point is that in the case of credit, you can be heavily burdened in many ways, not only through higher interest rates. So much goes into car insurance rates, I was not saying credit is the only variable. Only that many many necessities can get more costly as a result of poor credit.
And some people simply don't get it.
I was standing in the customer service line at a major retail chain about a year ago and overheard the conversation between a customer and the clerk.
The customer was trying to purchase a large flat screen TV on a no payment or interest plan. He had been rejected. And while fighting his case and pleading to get the financing, the clerk said "why don't you just use a credit card."
Now of course the clerk was at work, trying to do his job, and attempting to sell the TV. But this guy clearly had credit issues, not to mention his wife and 2 under 5 year old kids standing by his side. I thought to myself that the only positive outcome would be for this guy to walk away, go home, and skip the Tv purchase.
By the way, 1 other thing that many people don't realize plays a role in credit history and worthiness is the number of credit checks that are done against you. It is an indication of your spending habits and/or intentions to increase your debt load.
Credit checks prevent fraud? Please elaborate just how a credit check prevents fraud. #1 reason?
I think the OP was making assumptions about people's behaviours in the face of a poor economy. Perhaps they figured people are being forced to use credit lines to pay for more things, and then suffer a lower credit score when they are unable to pay them back in time. (In which case, I would question the purchase of a new iPhone anyway...)
Credit checks prevent fraud? Please elaborate just how a credit check prevents fraud. #1 reason?
If there were no credit checks, someone buys a "subsidised" iPhone, sells it on eBay, buys another "subsidised" iPhone, sells it on eBay, and repeat repeat repeat. OK, not a clever idea, but lots of people are smart enough to commit a crime but not smart enough to figure out the consequences when they get caught. Anyway, the phone company will have a very hard time recovering the money.
Credit checks prevent fraud? Please elaborate just how a credit check prevents fraud. #1 reason?
Just 1 more hoop for someone that is trying to commit fraud to have to jump through...so yes, credit checks can (help to) prevent fraud.
In the past AT&T would do credit checks if you were simply opening an account with them(This was prior to the iPhone). If your credit was poor, they'd require a deposit.
Anyway, I totally agree with you. If a persons credit sucks, it is an indication of how they handle their money. If a business(AT&T,Verizon...) sees them as a risk, they're going to want some sort of way to ensure that they're not going to lose money.
Think about it...deposit or not...the cell company is allowing you to use their system and then billing you. Whether it is billed in advance or billed in arrears is irrelevant. They need to issue the bill and collect payment.
There is a cost to issue bills, process payments, and especially manage non-payments.
Everything counts, and in fact that $50 invoice that goes unpaid is much much more costly for a company to deal with than the $200 invoice that is paid on time. And doing a credit check is a minimal level of security a company can take to try to have as little risk as possible.
Step thinking up to a corporate environment. Do you realize that when a business engages with a new client for the 1st time that they run a credit check on that company to extend payment terms? And that can be a credit check on a well known corporation! I am in enterprise sales, and I have had to collect credit information prior to finalizing negotiations on a contract from some very big name companies.
Oh, I totally agree with you. I understand the effects of bad credit and how businesses operate.
My first post was just to point out to another poster that AT&T doesn't JUST do a credit check when you're buying a smart phone. They do a credit check when they open your account.
Right...as they should!
People talk about the economy not being in great shape. You all know the primary reason for that, right? The #1 reason for all of the housing defaults was that credit was being extended that should never have been. People had "paper" equity in their houses due to extremely inflated property values, were getting home equity lines and 2nd mortgages, and blowing that money on trips, boats, whatever. Then the housing market slips a little, and bam, they are upside down.
Incorrect, the top reason to pull credit is to determine a person's financial ability to repay their debt. If their debt to income ratio is excessive, not even a good FICO score will get them what they want in life because it suggests one false move and there is a lot of debt to be defaulted on. Secondary is indeed fraud related, but it is not and has never been the number one reason for pulling credit.
Credit checks prevent fraud? Please elaborate just how a credit check prevents fraud. #1 reason?
Not the #1 reason, but if a person has had difficulties with their identity being stolen in the past, they can put a fraud alert on their credit report. The fraud team should be notified if AT&T pulls a credit report with this information. Then the fraud department would contact the consumer using only the phone # listed on the credit report. The fraud alert should have a phone number, if it does not then obtaining credit is difficult.
FWIW, I think it is indeed a wonderful idea that a teenager get a job if she/he wants a smart phone. Of course there are folks looking for work who are just trying to feed themselves and their families, but the jobs a teenager is going to get is most likely not the job those adults out of work are hoping to land.
Thanks for saying what I have been too lazy to post...and certainly more succinctly than I would have stated it.
I don't understand the apparent resentment and misunderstanding of the use of credit check before extending credit! The issuer of the credit quite reasonably wants to know if the applicant is a good risk, i.e. is likely to replay the debt in a timely fashion and doe not have a history of defaulting on payments. I would do no less if I were extending a loan to a stranger...assuming I had anything to lend, of course.