Why Do Alarm Companies Check Your Credit?

I am often asked why we need to check a new customer’s credit score. Customers often feel that since the monthly monitoring cost is such a small amount, their credit history should be of little significance.

If a customer is paying cash for all of the equipment being installed in their home or business, as well as the cost for the installation of that equipment, they should NOT have to have their credit score checked; however, in most cases the customer is paying little or nothing for the equipment and installation. The monitoring service is paying the Alarm Installation company for these costs, and typically the amount that they are paying is more than the customer is committed to pay over the term of the monitoring agreement. The monitoring company is gambling that the customer will in fact continue their service for well beyond the initial term of the agreement. The statistics kept on the retention and attrition of customers over the years show a direct relationship between an individual’s credit score and their likelihood to not only fulfill the terms of their agreement, but continue for years beyond the initial term of service.

So, even though a customer is not getting credit from the company, the credit score is very important in determining whether the investment made by the monitoring company will pay off. Typically the credit score is determined through what is called a “soft inquiry”, meaning that only one of the three credit bureaus is being checked, and only the score is determined without any details of credit history, delinquencies or current creditors. Because of the limited scope, a soft inquiry does not have the same negative impact on an individual’s FICO as a full inquire has.

Protecting the customer’s identity is of the outmost consideration. Confirming information from a credit file is a surefire way to do just that.

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