T-Mobile to extend smartphone financing to customers with bad or no credit

Posted:
in General Discussion edited January 2015
Resurgent wireless carrier T-Mobile on Thursday announced a new "smartphone equality" initiative that will see the company base device financing decisions for existing customers on their T-Mobile payment history, rather than their credit score.




Under the program, any T-Mobile customer who has made payments on time for 12 consecutive months will be eligible for all of the carrier's financing options, including those that offer no-interest payment plans with no down payment. Customers who have already been with T-Mobile for at least 12 months will immediately be eligible when the program goes live on Jan. 25.

"This is not only the right thing to do. It's the smart thing to do, too," T-Mobile CEO John Legere said in a release. "Fact is, your past payment history is the best way to tell if you'll make future payments on time. So this is good for customers and good for business."



"Ultimately, this initiative will lower the barrier for millions more Americans to get a smartphone - the most transformational technology in our lifetime," Legere added in an accompanying blog post. "At a time when mobile connectivity is sweeping the globe, the United States ranks a miserable 13th in the world in terms of smartphone penetration − behind a dozen countries including Australia, Ireland, Israel and Saudi Arabia among others."

Customers who currently have a prepaid relationship with T-Mobile can use that time as credit toward the smartphone equality program if they move to a postpaid plan.
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Comments

  • Reply 1 of 27
    Every time I see something like this from T-Mobile; I'm amazed at how bad it could have gotten if ATT had been allowed to buy them out and appreciate the fact they are pushing both the 2 top carriers to actually complete..

    Otherwise I think we'd be much worse off right now when it comes to pricing and service.
  • Reply 2 of 27
    robmrobm Posts: 1,068member
    I think he's doing the right thing with this.
    Rewarding existing customers - it gets my goat here in NZ when the telcos come out with these attractive offers for new customers while their existing customers get f'all. They effectively make it an easy choice to switch networks ! Back asswards - they should look after their existing customers, well they do kinda (at contract renewal time) but not as well as they should.
  • Reply 3 of 27
    pfisherpfisher Posts: 758member

    This is definitely something that had been happening in the mortgage industry when Congress pressed Fannie Mae to make banks give loans to people with alternative credit - and income. Like people without banking accounts and credit scores. I believe that extended to other industries - there is an alternative credit scoring industry based now on how you manage credit cards, but on how you pay your bills.

     

    Let's face it. Many people are just not good with credit. They are better with cash/checking. And a good chunk of them do pay their bills on time.

     

    FICO credit models do change, but they seem geared toward how much revolving credit you have. The world does not all run like this. Some people just live on cash and maybe a checking account and don't or can't have revolving credit. There is a large population of people who are shut out and it looks like T-Mobile realizes this. Well, Joe So-and-So pays his T-Mo bill diligently each month. So why not expand to selling him a smartphone?

     

    It all makes sense, although there is probably a chance to be an increase in credit defaults and all T-Mobile customers will pay for that. But if it brings  in more revenue, then maybe T-Mo can invest even more in their network, increasing  customers even more.

     

    They will probably get a lot more customers from other carriers.

     

    If ATT had bought T-Mo, we'd all be screwed even more. We were on ATT then moved to T-Mo a few years ago and we are very happy customers. Yes, we are in the city 99% of the time. LTE is great. We save a lot on our bills each month. My daughter in Europe can keep her line and use it when she visits the states. And I don't have to pay $40 for her separate line while she is gone (only $10). The billing is EASY to understand. If there is an issue, we can call customer care and get great service, and a lot less corporate-ty than ATT. T-Mo is simple. It's all good. And now T-Mo is shaking things up.

  • Reply 4 of 27
    MacProMacPro Posts: 17,905member
    Apple ][ will have a fit. I can see it now ... 'Only the elite should own an iPhone but any other make it's ok'. :D
  • Reply 5 of 27
    undedunded Posts: 43member
    I would switch to T-Mo in a heart beat if they have a better coverage where I live.
  • Reply 6 of 27
    solipsismysolipsismy Posts: 5,099member
    FYI: T-Mobile US has started their Stash Data Plans (read: rollover data) as well as giving every eligible user an additional 10GiB free to start. This means that many could probably drop their plans by $10 or $20 per month for some time to come. I suggest those users dial 611 on their T-Mobile phone and then dial 0# a couple times to get you to a representative to see if you're eligible, and when to expect it to begin.


    unded wrote: »
    I would switch to T-Mo in a heart beat if they have a better coverage where I live.

    Hopefully this huge jump in subscribers will push them to increase their coverage.
  • Reply 7 of 27
    slurpyslurpy Posts: 5,090member

    I like Legere, but could have done without the unprofessional, awkward cuts in there, as well as the Starbucks ad that looked like ridiculous product placement- even if it wasn't. 

  • Reply 8 of 27
    solipsismysolipsismy Posts: 5,099member
    slurpy wrote: »
    I like Legere, but could have done without the unprofessional, awkward cuts in there, as well as the Starbucks ad that looked like ridiculous product placement- even if it wasn't. 

    I appreciate his candidness but it somehow his presentation (choice of language, dress, hairstyle, something) gives it all the air of creepiness from a snake oil salesman. I'd like to see him more subdued in his demeanor (although this video being perfectly fine), more than a change to the words he uses in interviews.

    In some ways he reminds me of when Homer Sumpson went to go work for Hank Scorpio of Globex Corporation.

    cc: [@]GTR[/@]
  • Reply 9 of 27

    Because this strategy worked out so well in the housing sector...

     

    Hopefully Apple receives up front payments for their devices from T-Mobile. This looks like a last-ditch desperation move on Legere's part.

  • Reply 10 of 27
    So far, I've been with T-Mobile for over an month. The service and cost are much than Verizon. When I first signed up with T-Mobile, I have pretty good credit, so I was able to get an phone with zero down. I currently have a iPhone 6 with 64GB. I was very happy with T-Mobile.

    Zero down for all is an great way to attract more customers.
  • Reply 11 of 27
    dasanman69dasanman69 Posts: 12,972member
    Because this strategy worked out so well in the housing sector...

    Hopefully Apple receives up front payments for their devices from T-Mobile. This looks like a last-ditch desperation move on Legere's part.

    T-Mobile-bubble ;)
  • Reply 12 of 27
    feynmanfeynman Posts: 1,087member

    Off Topic I know but is it just me or does this guy totally look and sound like he could be Scott Forstall's dad?

  • Reply 13 of 27
    koopkoop Posts: 337member

    I wish T-Mobile existed at all in my State. Just Verizon really. 

  • Reply 14 of 27
    Quote:

    Originally Posted by sog35 View Post

     

    There's one problem with this new strategy:

     

    The people with excellent credit will be subsidizing those with bad credit who default.


     

    I don't see it that way, at all. T-Mo isn't providing "Zero Down" if you have no previous business relation with them and poor or no credit history. However, they will let you independently build credit with them and will give you the benefits of "good credit" if you have (or establish) 12 months on time payments for T-Mo service.

     

    That isn't subsidizing bad credit, that's rewarding good credit and honoring good business from previously established customers.

  • Reply 15 of 27
    pfisherpfisher Posts: 758member
    Comparing this to credit decisions in the housing bubble are not fair. The approach to how people qualify is the only somewhat similar comparison.

    Also it's a gross assumption to state that people with good credit will subsidize. Threre is sure to already be a default rate anyway. And there could be across the board slight bump in a rate. But at the end of the day is more subscribers and better revenue and likely a better investment.

    Also we do know that service can be bad on any carrier depending on where you live.

    And at the end of the day I'm getting better service. Better customer service. Less scamming from att and more competition and a cheaper bill. It's all a winning situation.

    Some long standing corporations like att will likely always be terrible for the consumer.
  • Reply 16 of 27
    smart
  • Reply 17 of 27
    xixoxixo Posts: 417member
    pfisher wrote: »
    Financial industry lobbyists pressed Congress to press Fannie Mae to loosen regulations to allow banks to give loans to people with alternative credit - and income so that demand for collateral debt obligated securities could be satisfied

    Fixed that for you.
  • Reply 18 of 27
    xixoxixo Posts: 417member
    sog35 wrote: »
    The people with excellent credit will be subsidizing those with bad credit who default.

    The word used in the context you apply here doesn't mean what you think it does.

    If a company gives money away, it either goes out of business or the CEO is replaced.

    Some folks posting here should stick to technology...
  • Reply 19 of 27
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by SpamSandwich View Post

     

    Because this strategy worked out so well in the housing sector...

     

    Hopefully Apple receives up front payments for their devices from T-Mobile. This looks like a last-ditch desperation move on Legere's part.




    It is smart move by T-Mobile. Responsible people can have bad credit for lots of reasons including divorce, temporary job loss, identity theft, ect. 

     

    Looking at the payment history of current customers as opposed to credit reports is more likely a better indicator of it's own customer's credit worthiness. It also saves T-Mobile money on obtaining credit reports. 

  • Reply 20 of 27
    tbelltbell Posts: 3,146member
    Quote:

    Originally Posted by 31 Flavas View Post

     

     

    I don't see it that way, at all. T-Mo isn't providing "Zero Down" if you have no previous business relation with them and poor or no credit history. However, they will let you independently build credit with them and will give you the benefits of "good credit" if you have (or establish) 12 months on time payments for T-Mo service.

     

    That isn't subsidizing bad credit, that's rewarding good credit and honoring good business from previously established customers.


     

     

    Exactly smart business. Further, why should T-Mobile pay for credit reports when it already has first hand knowledge of its customers credit worthiness?

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