The CRA reporting provision is likely there in case you mishandle the account. Say you close the linked bank account or don't have enough funds available to cover a transaction. You would be subject to returned check fees (as explained in the terms) and you can also take a hit on your credit.
They do not perform a credit check to get the card. A soft pull did show up on my report and as best I can tell it's simply for identity verification. I applied by mail about 6 months ago and they must have fat-fingered something during the application process as they sent me a letter saying they couldn't verify my identity. They requested I send in a copy of my driver's license via mail or fax. I declined, and later applied in store without any hassle. I never saw a pull for the first app, but the in-store debit app did result in a soft pull.
I doubt anything you do with the debit card will ever help you get a credit card with them, but I could be wrong. I have no interest in their credit card personally.
