NEW YORK — Apple fans who froze their credit after the Equifax data breach may end up with another hassle on their hands if they try to get one of the new iPhones that can cost more than $1,000. People who did so and want to make any big purchase may find the same.
Since Equifax disclosed that 143 million Americans had their Social Security numbers and other personal data hacked, experts have encouraged people who may affected to put in place what's known as a credit freeze. That locks down a person's credit from being stolen by identity thieves — but could also mean delays and more fees for the Equifax victims who want to finance a new phone.
You can unfreeze your credit before a big purchase and freeze it again afterward. How long it will take and how much it costs vary state by state. Experts say generally it's best to give the major credit bureaus — TransUnion, Experian and Equifax — notice of several hours or even a few days before you apply for financing. And people just getting used to the idea of freezing their credit could pay $3 to $10 for each action at each of the three bureaus.
Payment plans are a growing business for the major wireless carriers, many of which no longer subsidize a customer's purchase, because a monthly payment makes an expensive smartphone more affordable. And Apple and the wireless carriers often need access to your credit report in order to approve the sale of a new phone under a monthly plan.
"But if you are someone who has frozen their credit record, you may suddenly discover that you can't afford an iPhone X, after all," said Patrick Moorhead, an industry analyst with Moor & Insights.
Citizens Financial Group, which runs the Apple financing program, said any new or existing customer who has a credit freeze on their information will be declined financing. So they would have to unfreeze their credit, at least temporarily. Sprint, Verizon and AT&T run credit checks with the agencies for new customers. Policies vary for existing customers. T-Mobile's website says it runs credit checks but it did not respond to questions about its policy.
Analysts say two-year financing plans have become essential to selling high-end smartphones. International Data Corp. analyst Ramon Llamas called them "critical." Moorhead expects virtually everyone interested in the new iPhone X to use an installment plan.
Apple rolled out its program two years ago that lets customers upgrade to a new phone each year and divides the cost of the phone into a monthly payment. The company doesn't share details on how many customers finance their phones through Citizens/Apple instead of their carriers, and declined to disclose how many of its iPhones are financed.
For other carriers, it's clearly big business. AT&T sold 3.58 million smartphones to customers under payment plans last quarter, according to its most recent filing. Verizon customers financed $14.51 billion in smartphones under the company's payment plan in the first six months of 2017, and roughly half its customers who pay a cellphone bill at the end of each month are on a payment plan.
The Verizon and AT&T figures include sales of both iPhones and other smartphones like Samsung, which has a larger worldwide share of the smartphone market than Apple. But iPhones generally cost more than phones by other makers — roughly $685 compared to the $340 average price of a Samsung phone — so analysts think a greater share of iPhone customers may finance theirs.