What does a pre-approved credit card mean?

Pre-approved credit cards are one way credit card companies attract new customers. These offers are typically mailed to potential cardholders who meet certain minimum approval criteria.

If you’ve ever received one of these offers, you may be wondering what effect it has on your credit score. Or maybe you’re wondering what to do next. But first, what does a pre-approved credit card actually mean? Not sure what it means to be pre-approved or what to do if you’re pre-approved? Read on!

What does a pre-approved credit card mean to you?

Being pre-approved for a credit card means that, based on certain criteria, it is probably get approved for a credit card if you apply. This can also be called pre-qualification. However, this is not a guarantee.

In most cases, this simply means that you have a minimal credit score and a good credit history. Sometimes the issuer asks for more information, such as pay stubs or annual income. You will still need to complete the application process to be approved for the advertised credit card.

Additionally, in most cases, pre-approval is simply a form of promotional and marketing materials. The goal is to encourage you to apply for the credit card being offered. In some cases, you may receive special rewards for submitting an application. This is a tactic that credit card companies typically use to attract new customers.

Please remember that receiving a pre-approved credit card offer by mail, phone or email does not mean you have been fully approved.

What is the difference between credit card pre-qualification and credit card pre-approval?

So what does credit card pre-approval mean compared to pre-qualification? Pre-approved and pre-qualified credit cards are often used interchangeably, but there is one slight difference between them.

Credit card offers before approval

The pre-approval offer is initiated by the credit card issuer, e.g., American Express, Discover, Bank of America, Chase, etc. Credit card pre-approval usually means that the credit card issuer has reviewed your credit history and financial information in more detail and determined that you meet the criteria required to apply for the card.

Pre-approval often involves a soft credit inquiry that has no impact on your credit score. However, the issuer may still make a hard credit inquiry when you formally apply for the card. In some cases, they may make a hard inquiry into your creditworthiness. They may also ask for additional information about your financial situation, such as pay stubs or W-2 statements.

Pre-approved offers are more likely to result in actual approval once you submit your application. However, they are still not a guarantee.

Pre-qualified credit card offers

On the other hand, a pre-qualified offer is an earlier step in the selection process. A pre-qualified offer is typically based on even more limited information about your credit profile, but does not include a hard credit inquiry or other financial information.

If you are pre-qualified for a credit card, it means that the credit card issuer, based on the information it has, believes that you may qualify for the card. That said, this does not guarantee that you will be approved when you submit your official application.

Now you know how to decipher what pre-approved and what pre-qualified means the next time one of these offers comes up.

Expert Tip: Only apply for a credit card when you’re ready

While it can be exciting to receive an email or letter saying you’re pre-approved for a loan, don’t be tempted to get a credit card unless it makes sense for your finances.

Even if a credit card offers tons of rewards, it can still lead to debt. If you get a credit card, make sure you are responsible for it and pay it off in full each month to avoid going into debt.
How to get pre-approved for credit card offers

Credit card companies and other lenders have the ability to access information on your credit report to offer you pre-approval.

Consumer reporting companies or credit bureaus provide a list of eligible individuals who meet the company’s pre-approval requirements. Obtaining this information is considered a soft inquiry on your credit report.

Generally speaking, if you maintain a good credit score and good credit history, you will increase your chances of approval. You don’t have to wait for your credit card offer to be pre-approved. Most credit card companies allow you to check if you’re pre-approved for their credit cards by completing a short application on their website.

By filling out a short form with your Social Security number, income, employment and financial obligations, you can quickly find out if you qualify.

However, a pre-approval offer is not necessary to apply for a credit card. You can simply apply for the card directly on the card issuer’s website.

Does credit card pre-approval affect your credit score?

When a credit card company makes a soft inquiry on your credit report to check for pre-approval, it does not negatively impact your credit score. These types of credit checks also do not lower your credit score. You’ll be able to see them on your credit history if you request a credit report from any of the three major credit reporting bureaus: Experiment, EquifaxAND Transunion.

However, when you actually apply for a credit card, a difficult inquiry is made. This lowers your credit score. For this reason, you want to limit the number of difficult inquiries about your credit.

Before applying for a credit card, check to see if you’re pre-approved on the card issuer’s website. This will help you avoid hard inquiries that lower your credit score on a card you don’t qualify for.

What to do if you get pre-approved for a credit card

If you get pre-approved for a credit card, the first thing you should do is decide if a credit card is right for you.

You may not have thought about applying for a credit card before receiving the promotion, so don’t feel pressured to apply. If a new credit card isn’t right for your financial situation, simply decline the offer (safely). Credit cards have many pros and cons, so make sure it makes sense for you before applying.

If you’re looking for a new credit card, follow the instructions in the offer to apply. Please remember that submitting an application requires a thorough check of your credit. So make sure you are really interested in the application.

What to pay attention to before applying for a credit card

A credit card can be a large financial commitment. Before you apply, there are a few things you need to consider.

Interest rates

The annual percentage rate (APR) is the interest rate you’ll pay on the balance you hold from month to month. The higher your rate, the more money you will have to pay above your principal balance.

Credit card interest rates can be extremely highso it’s important to know this rate before applying for the card.

Fees

Some credit card companies charge annual fees, foreign transaction fees, and late fees. These are fees that you, as a potential cardholder, should be aware of and be prepared for.

You don’t want to be blindsided by additional charges on your bill. Please take the time to familiarize yourself with these fees in advance to make this possible learn how to avoid them.

Awards

Credit card companies are always competing on incentives to attract new customers. Some offer cash back incentives, while others may offer travel points. Check out the different rewards offered by your credit card company.

Take these into account when deciding which credit card offer to apply for. Ideally, you’ll want to apply for a card with rewards that benefit you.

Your current debt

Always handle your credit card responsibly. Without a solid financial plan to manage your money, you can easily fall into a spiral of credit card debt.

If you already have a significant amount of debt, applying for a credit card may not be the best option for you. Instead, tackle paying off your debt first.

Does pre-approval mean you’ll be approved for a credit card?

Credit card pre-approval increases your likelihood of approval, but does not guarantee it. Pre-approval is based on a soft credit inquiry and preliminary information.

Final approval, on the other hand, depends on a more comprehensive evaluation, including a potential hard credit inquiry and the credit card issuer’s decision. Your financial situation may change from pre-approval to formal application, which will impact your final decision.

Can a pre-approved credit card be denied?

Yes, you can decline a pre-approved credit card. Pre-approval is based on a preliminary review and a soft credit inquiry, but your credit card company may still reject your formal application after conducting a more thorough review, including a hard credit inquiry. Factors such as changes in your financial situation or discrepancies in your application may lead to rejection despite pre-approval.

Is getting pre-approval a good thing?

Getting pre-approved for a credit card is generally a good thing. It indicates that the credit card issuer believes you meet their initial criteria, which increases your likelihood of approval when you formally apply. However, this is not a guarantee of final acceptance. You should still consider factors such as interest rates, the annual fee and any rewards before deciding to accept the offer.

Will accepting a pre-approved credit card affect my credit score?

Being accepted for a pre-approved credit card usually comes with a soft credit check that doesn’t negatively impact your credit score. However, in some cases this may involve a hard credit inquiry.

A hard inquiry can temporarily lower your credit score by a few points. However, this impact is usually small and can be offset over time by responsible use of your credit card.

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Make smart choices if you’re pre-approved for a credit card

Now that you know what a pre-approved credit card means, you can plan your next steps. Please remember that getting pre-approved for a credit card does not guarantee that you will be approved. It also doesn’t mean you have to apply at all. It’s simply an offer you can accept or decline.

If you no longer wish to receive these offers, you have the right to opt out of marketing at OptOutPrescreen.com. Please note that it may take up to 60 days before you stop receiving these offers.

Ultimately, credit cards can be used responsibly to build credit. If you want to learn more about building or improving your credit, sign up with us free credit course!