Does Getting a Credit Check by Cell Phone Companies Affect Your Credit?

by Ciaran John, Demand Media
    Cellphone company inquiries appear on your credit report.

    Cellphone company inquiries appear on your credit report.

    Cellphone companies often check your credit report before allowing you to sign a service contract. These firms don't want to enter into agreements with people who have a habit of paying their bills late. Cellphone firms can order credit reports from Equifax, Experian or TransUnion. These credit inquiries do affect your credit score.

    Hard Versus Soft

    Credit bureaus divide credit inquiries into two categories: soft and hard inquiries. Soft inquiries are inquiries that are not tied to applications for credit or other types of services. Banks sometimes use soft pulls to gather basic information about consumers before mailing out pre-approval letters to prospective credit card users. These inquiries don't show up on your report and you may not even realize that anyone checked your credit. If you apply for a loan, credit card or request a new service such as a cellphone or satellite TV then the provider may choose to check your credit. These inquiries are termed hard because they are tied to new financial obligations+.

    Credit Score

    Credit bureaus associate hard inquiries with increased risk. Simply put, the more financial obligations you have the more likely you are to run out of cash. Your credit score falls whenever a new hard inquiry appears on your report. If you shop around for the best cellphone plan, several firms may check your credit report. Generally, inquiries within the space of a few weeks from one type of service provider will only show up as one hard inquiry on your report. The damage is usually short lived and your score should recover within a few months if you pay your bill on time.

    Credit Report

    When you take out a loan or credit card, both the lender's initial inquiry and the account itself will appear on your credit report. Your payment history has a direct effect on your credit score. In contrast, neither your cellphone plan nor your payment history show up on your credit report. Although a service plan is a financial obligation, it's not credit related since the cellphone company isn't lending you any money.

    Derogatory Accounts

    If you don't pay your cellphone bill then your service provider may report it to the credit bureaus as a past due debt. When you fall behind on your payments, service providers become creditors because they've provided you with a service that has some financial value and you've failed to pay off that debt. As with other types of bad debts, a past due cellphone account can remain on your credit report for up to seven years. Needless to say, past due debts have a much more damaging effect on your score than hard inquiries.

    About the Author

    Ciaran John began writing in 1994 with contributions to "The Hourly Press" and "The Sawbridgeworth Observer," and has since written for many online and print publications. He has 12 years experience working for financial services companies as a business banker, lender and investment representative and spent four years working in human resources.

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