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For Christmas, we ordered DISH Network for my wife’s parents. They live in the country and don’t have cable access; satellite service is their only option. In the process of ordering the service, I learned that DISH Network runs a credit check that results in an inquiry on your credit file. Even more important, it turns out that the price you pay for the DISH Network service will vary substantially (we’re talking hundreds of dollars) depending on your credit.
This is another example of how your credit score can affect many areas of your financial life. So let’s take a look at why DISH Network checks the credit history of new customers, how the credit check will affect your FICO credit score, and the effect your credit will have on how much you pay for DISH Network service.
Before getting to the details, I should say that the folks at DISH Network were great. They answered all of my questions (and I had a lot of them), and they were available to install the equipment the very next day. While you can order DISH Network online, I found that talking to a live representative (DISH #: 1-888-347-2579) was the only way to get all of my questions answered.
Why DISH Network checks credit histories
DISH Network offers new customers a lot of equipment for free in exchange for signing up for a 2-year commitment. For satellite service, the equipment includes the satellite dish and the DVR. The equipment isn’t really free. Rather, the cost of the equipment is included in the monthly service fee. As a result, DISH Network wants to make sure that new subscribers will fulfill the 2-year commitment. Checking a potential customer’s credit enables DISH to assess their credit risk.
How the credit check will affect your credit score
Credit inquiries occur when a consumer’s credit history is pulled and reviewed by creditors and potential creditors. There are two types of inquiries, often referred to as a hard pull or a soft pull of a credit file. Hard pulls lower your credit score, typically by a small amount, while soft pulls do not.
In the case of DISH Network, the representative told me that the inquiry would lower my FICO credit score by 2 points. I doubt that’s accurate. For starters, the impact of an inquiry on a credit score depends on a number of factors, including what your credit score is to begin with, and the number of other inquiries reflected in your credit history. But with that said, I suspect the effect on my score is minimal and will be temporary. On the other hand, if I were about to buy or refinance a home, I’d hold off on the satellite service until I closed on the loan.
How your credit affects how much you pay for DISH Network
What really surprised me was the cost difference for those with poor credit. For example, while we got the DVR for free, some would have to pay an activation fee of $99 or $149 based on their credit. The DISH rep explained that he does not see any of my credit details or credit score. Instead, the computer simply puts each potential customer into a specific credit category.
And on top of the activation fee, some folks won’t qualify for special pricing. For example, DISH Network is offering its 120-channel package at a $15 a month discount ($25 instead of $40). But those with poor credit won’t qualify for the discounted price.
DISH Network is not alone in using credit histories and scores to evaluate potential customers. Satellite and cable companies alike, which offer long-term contracts in exchange for free equipment and reduced pricing, check credit files. Cell phone carriers do the same thing. It’s just one more reason why a good credit score is so important.