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I just tried to get a cell-phone account opened and the people at the store said that my credit wasn’t good enough and that I would have to put a cash deposit down to get the phone. Why do they have to check credit in the first place and why do they need a deposit on a cell-phone account? It’s not like I wanted a credit card.
Although a cellular phone may not seem like a credit-related item, it is. Just as you buy first and pay later with a credit card, you are spending airtime first and then paying later when your cellular phone bill comes each month. Therefore, a credit check is needed to help determine the likelihood that you will be able to pay when billed. An added reason for checking credit where cellular phones are concerned is the common practice of choosing a pre-set plan for air time—30, 60, 90 minutes a month, for example. To provide these money-saving plans, the cellular provider must be reasonably sure that the majority of customers will uphold the terms of the plan for a given length of time, that length of time being your service contract.
In order to serve as many customers as possible, if a person does not meet the normal credit standards of the provider (including having no credit established as yet), the alternative method of putting a cash deposit down is often used. This way, the provider has some guarantee that excessive phone charges will not be run up and then left unpaid. The deposit is meant to cover any possible delinquencies.
For information on improving your credit for the future, you may want to read “Becoming a Good Risk.”
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