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Why should retailers need credit checks of customers for broadband connection?

You might why a broadband customer might require a credit check. Most of the customers will be surprised if they hear this from the company. They might tell, that they are paying for the service upfront, so why a credit check is required on them. Even though this question might seem at first place, a bit offbeat but a credit check is a definite requirement for broadband customers. We will explain in this article, why this is required.

Requirement of this credit check

You might wonder why my broadband service provider requires a credit check, specifically when you are not availing of any credit from them. This can be very frustrating as well as irritating at certain times. But, you should know why this check is required. Your broadband service provider simply wants to know if you can pay the monthly bills or not. They might also like to determine what is the probability of not paying the bills. All these things can be determined by analyzing the creditworthiness of the customers. You can just think of it as a process of signing up for your new credit card, where the credit card company wants to determine if you can pay your monthly bills or not. If not, then this nonpayment of the bills might gradually turn into bad debt.

A credit check is generally done by most of the ISPs if not all of them. It helps them to find out the amount of risk associated with each of the customers. Probably, for a high-risk customer, they can refuse the connection, put him on a waitlist, or might offer a low-cost plan which might have lesser risk associated. The good news is, if you have a very good credit score then you can get the connection even without paying a deposit.

Type of risks

Primarily, two types of risks are determined through credit checks. First, they want to check the odds for paying the bills. This is applicable for postpaid connections, where the customer will pay the bills post-consumption at the end of the month. This is a kind of a microloan in form of service, which customers get from their ISP. However, ISP’s do provide a grace period for paying the bills and post that a late fee might be added. If the bill remains unpaid for a certain period, the ISP might disconnect the connect the connection permanently. In such cases, the company might not be able to recover the payable.

Secondly, they want to check the probability of returning the device which is provided during giving the connection. These devices are costly, and the broadband company might want to ensure that they are returned once the connection is terminated. This includes the DVR player, modems, and routers. If you think that you have bought these devices, when you took the connection, then you are wrong. Broadband companies charge lease fees for these devices.

Is it going to affect your credit score?

Most of the ISPs perform a soft check on the credit history which will not affect your credit score. But, sometimes they might need further analysis, then they might do a hard check which will affect the credit score.

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