Everyone knows that having a good credit history is an important part of purchasing or renting a home. What you may not know, is that keeping the hottest new gadget in your pocket may be hurting your credit score. With Apple’s Iphone Upgrade Program, a 24 month payment plan enables you to always have the latest version of the Iphone and you even get AppleCare+ coverage! So how does this damage your credit? Hard Credit Pulls.
When you enroll in the program, you are actually taking out a loan for the price of your phone. Part of any loan process is that a “hard pull” of your credit is taken which is then reflected on your credit report. Different than a “soft check” or “soft pull” where a company or person simply checks your credit, a “hard pull” or “hard credit check” is when a financial institution checks your credit when making a lending decision. When you upgrade your phone, say 9 months later, you have another hard pull and take out another 24 month loan to cover the cost of the new phone. This means two hard credit pulls in one 12 month period which negatively changes your credit score; up to 10 or 20 points.
So be careful out there! Make sure to always read the terms of agreements and inquire as to the need for any pulls on your credit. Knowing your credit score is important and having all the facts is a great step towards improving your credit!