Cell/Utility Inquiries - Why the Heck are these "hard"?

[Anonymous]

I don't quite understand it.  How does establishing phone service make you a higher risk to a lender?  I understand applying for a bunch of credit at the same time, but cell phone service comes nowhere near what I'd define as "credit". 

I personally believe these should be soft.

[Anonymous]

Technically, you're applying for a line of credit.  In terms of wireless providers, you're receiving a subsidized phone.  In other words, you're receiving a phone for $200 that retails for $750.  If you walk, they lose money, it's that simple.  Not only that, you could technically run up the bill charging different things to your line, and then once again, walk, and not pay anything.

I realize it may sound weird, but you do technically have a line of credit, since it is a postpaid account, and you're able to charge things against it.

The hard pulls are also mainly used to determine whether or not you will be required to pay a security deposit.

[Anonymous]

Your also typically signing a contract for usually two years which is also another reason they pull your credit because the want to know that your going to follow through on that contract if it looks like your don't i.e. your score is low then they are less likely to allow you to do that or they may even go as far as to have you put down a down payment of some sort that they will keep onhand in the event  you back out!

[RobertEG]

The FCRA establishes numerous permissible purposes for review of a consumer's credit report that are not simply related to extending monetary credit.

Employment checks, the underwriting of insurance, and checks related to legitimate business transactions initiated by a consumer are specfically authorized under FCRA 604.

You receive goods or services that could lead to a business loss by the creditor or business concern. You apply for a job that gives you authority over money and/or impact on the business.

In the end, it gives businesses a quick way to assess risk.  Without use of business credit inquiries, the primary reason for collecting all that info would be meaningless, and establishing new credit or business transactions would not be as prompt as it is today.

So consumers must accept credit inquiries when they app for credit or business transactions.  Its the primary reason the whole system exists.

[Steelersfan904]

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@RobertEG wrote:

The FCRA establishes numerous permissible purposes for review of a consumer's credit report that are not simply related to extending monetary credit.

Employment checks, the underwriting of insurance, and checks related to legitimate business transactions initiated by a consumer are specfically authorized under FCRA 604.

You receive goods or services that could lead to a business loss by the creditor or business concern. You apply for a job that gives you authority over money and/or impact on the business.

In the end, it gives businesses a quick way to assess risk.  Without use of business credit inquiries, the primary reason for collecting all that info would be meaningless, and establishing new credit or business transactions would not be as prompt as it is today.

So consumers must accept credit inquiries when they app for credit or business transactions.  Its the primary reason the whole system exists.

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I don't think his main objection is them doing a credit pull but more the less them doing a hard pull instead of a soft pull which I agree 100% with, if the cell phone companies would report each month then I wouldnt have a problem with it but to do a hard pull with absolutely no added benefit is pointless

[FrugalRican]

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@Steelersfan904 wrote:

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I don't think his main objection is them doing a credit pull but more the less them doing a hard pull instead of a soft pull which I agree 100% with, if the cell phone companies would report each month then I wouldnt have a problem with it but to do a hard pull with absolutely no added benefit is pointless

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I agree with this. I wish it was that way.
That's one of the reasons I stepped away from contract phones.