Pre-approved credit cards are one way that credit card companies attract new customers. These offers are typically sent by mail to potential cardholders who meet some minimum criteria for approval.
If you’ve ever received one of these offers, you may be wondering how it impacts your credit score. Or perhaps you are wondering what to do next. But first off, what does pre-approved for a credit card actually mean? Unsure what it means to be pre-approved or what to do if you are pre-approved? Keep reading!
Table of contents
- What does pre-approved for a credit card mean for you?
- What is the difference between pre-qualified for a credit card and pre-approved for a credit card?
- Expert tip: Only apply for a credit card if you are ready
- Do credit card pre-approvals impact your credit score?
- What to do if you get pre-approved for a credit card
- What to consider before applying for a credit card
- Does pre-approval mean you will get approved for a credit card?
- Can you be denied a pre-approved credit card?
- Is getting pre-approved a good thing?
- Will accepting a pre-approved credit card hurt my credit score?
- More articles related to credit
- Make smart choices if you are pre-approved for a credit card
What does pre-approved for a credit card mean for you?
Being pre-approved for a credit card means that based on certain criteria, you are likely to be approved for a credit card if you were to apply. This may also be referred to as pre-qualification. However it is not a guarantee.
In most cases, it simply means you have a minimum credit score and a good credit history. Sometimes the issuer asks you for more information such as pay stubs or annual income. You will still have to go about completing that application process to be approved for the advertised credit card.
Additionally, in most cases, a pre-approval is simply a form of promotional and marketing material. The purpose is to encourage you to apply for the credit card that is being offered. In some cases, you may be offered specific rewards for applying. It’s a tactic credit cards companies typically use to get new customers.
Keep in mind that getting a pre-approved credit card offer in the mail, by phone, or email does not mean that you have been fully-approved.
What is the difference between pre-qualified for a credit card and pre-approved for a credit card?
So what does a pre-approved for a credit card mean versus being pre-qualified? Pre-approved vs pre-qualified credit cards are often used interchangeably but they do have one slight difference.
Pre-approval credit card offers
A pre-approval offer is initiated by the credit card company e.g. American Express, Discover, Bank of America, Chase etc. When you’re pre-approved for a credit card, it typically means that the credit card company has reviewed your credit history and financial information in more detail and has determined that you meet their criteria to apply for the card.
Pre-approval often involves a soft credit inquiry, which does not impact your credit score. However, the issuer may still perform a hard credit inquiry when you formally apply for the card. In some cases they may run a hard inquirary on your credit score. They may also ask for additional information about your financial situation, such as your pay stubs or W-2 statements.
Pre-approved offers are more likely to result in an actual approval when you submit an application. However, they are still not a guarantee.
Pre-qualified credit card offers
Contrarily, a pre-qualified offer is an earlier step in the screening process. A pre-qualified offer is usually based on even more limited information about your credit profile, but does not involve a hard credit inquiry or other financial information.
When you’re pre-qualified for a credit card, it means that the credit card company believes you may be eligible for their card based on the information they have. That said, it’s not a guarantee that you’ll be approved when you officially apply.
Now you know how to decipher what pre-approved vs pre-qualified means the next time one of these offers come your way.
Expert tip: Only apply for a credit card if you are ready
While getting an email or letter that says you are pre-approved for a credit can be exciting, don’t be swayed into getting a credit card unless it makes sense for your finances.
Even if a credit card offers a ton of rewards, it can still lead to a life of debt. If you do get a credit card, make sure you are responsible with it and pay it off in full each month to avoid getting into debt.
How to get pre-approved for credit card offers
Credit card issuers and other lenders have the ability to access information on your credit report in order to offer pre-approval to you.
Consumer reporting companies, or credit bureaus, provide a list of qualifying persons who meet the company’s requirements for pre-approval. Obtaining this information is considered a soft inquiry on your credit report.
In general, if you maintain a good credit score and have a good credit history, you’ll increase your approval odds. You don’t have to wait for an offer to be pre-approved for a credit card. Most credit card companies allow you to check to see if you are pre-approved for their credit cards by completing a brief application on their website.
By filling out a short form with your social security number, information about your income, employment, and financial obligations, you can quickly find out if you qualify.
A pre-approval offer isn’t necessary to apply for a credit card, though. You can simply apply for a card directly on a card issuer’s website.
Do credit card pre-approvals impact your credit score?
When a credit card issuer does a soft inquiry on your credit report to check for pre-approval, it does not negatively affect your credit score. These types of credit checks also do not lower your credit score. You will be able to see them in your credit history if you request your credit report from any of the three main credit reporting bureaus: Experian, Equifax, and Transunion.
However, when you actually apply for a credit card, a hard inquiry is made. This does lower your credit score. Because of this, you want to limit the number of hard inquiries made on your credit.
Before applying for a credit card, check to see if you are pre-approved on the card provider’s website. This will help you avoid having a hard inquiry that lowers your credit score for a card that 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 that you should do is decide if a credit card is right for you.
You may not have been thinking of applying for a credit card prior to receiving the promotion, so don’t feel pressured to apply. If a new credit card isn’t right for your financial situation, simply toss the offer away (securely). There are many advantages and disadvantages of credit cards, so make sure it makes sense for you before you apply.
If you are in the market for a new credit card, follow the instructions provided in the offer to apply. Remember, applying requires a hard inquiry on your credit. So be sure that you are truly interested in applying.
What to consider before applying for a credit card
A credit card can be a big financial commitment. Before applying for one, there are a few things that you need to take into consideration.
Interest rates
The annual percentage rate (APR) is the interest rate that you will pay on any balance that you carry from month to month. The higher the rate, the more money you’ll have to pay above your principal balance amount.
Credit card interest rates can get extremely high, so it’s important that you know this rate before applying for a card.
Fees
Some credit card companies charge annual fees, foreign transaction fees, and late fees. These are charges that you should be aware of and prepared for as a potential cardholder.
You don’t want to be blindsided by additional fees on your bill. Take the time to review these fees beforehand so that you can learn how to avoid them.
Rewards
Credit card companies are always competing on incentives to attract new customers. Some offer cash back incentives, while others may offer travel points. Look up the different rewards offered by the credit card company.
Take these into consideration when you’re deciding which credit card offer to apply for. Ideally, you’ll want to apply for a card with rewards that are advantageous to you.
Your current debt load
A credit card should always be handled responsibly. Without a solid financial plan to manage your money, you can easily find yourself in mounds 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, work to pay off your debt first.
Does pre-approval mean you will get approved for a credit card?
Pre-approval for a credit card increases your likelihood of approval, but it doesn’t 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 assessment, including a potential hard credit inquiry and the credit card issuer’s discretion. Your financial situation can change between pre-approval and formal application, impacting the final decision.
Can you be denied a pre-approved credit card?
Yes, you can be denied a pre-approved credit card. Pre-approval is based on a preliminary assessment and soft credit inquiry, but the credit card issuer may still decline your formal application after conducting a more thorough review, including a hard credit inquiry. Factors like changes in your financial situation or discrepancies in your application can lead to a denial despite pre-approval.
Is getting pre-approved a good thing?
Getting pre-approved for a credit card is generally a good thing. It indicates that a credit card issuer believes you meet their initial criteria, increasing your likelihood of approval when you formally apply. However, it’s not a guarantee of final approval. You should still consider factors like interest rates, the annual fee, and any rewards before deciding to accept the offer.
Will accepting a pre-approved credit card hurt my credit score?
Accepting a pre-approved credit card normally include a soft credit check, which does not hurt your credit score. However, in some cases, it can involve a hard credit inquiry.
A hard inquiry can temporarily lower your credit score by a few points. However, this impact is usually minor and can be offset by responsible credit card usage over time.
More articles related to credit
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Make smart choices if you are pre-approved for a credit card
Now that you know what pre-approved means for a credit card, you can figure out your next steps. Remember that getting pre-approved for a credit card does not guarantee that you will be approved. It also doesn’t mean that you even need to apply. It is simply an offer to apply that you can choose to accept or decline.
If you no longer want to receive these offers, you have the legal right to opt out of this marketing at OptOutPrescreen.com. Note that it can take up to 60 days before you stop receiving these offers.
Ultimately, credit cards can be used responsibly to build your credit. If you’re interested in learning more about building or improving your credit, enroll in our free credit course!