Credit Card Preapproval: What To Know and Who To Trust

FT Contributor
A woman with her credit card and tablet, waiting for preapproval.
Reading Time: 4 minutes

With so many credit cards available today, it can be overwhelming trying to determine the best new credit card account for you. A credit card pre-approval is a more serious sign of interest than a pre-qualification, and your information, including your credit report, could be called into review if you decide to take the offer.  

One of the most important things you need to know is how credit card pre-approval works, so you know who to trust when it comes time to open a new credit card account.

What Does Pre-Approval Mean?

Pre-approval means that a creditor has done a light screening of your financial or personal information and has used some criteria to determine that you may be a good fit for their services.

Pre-approval doesn’t guarantee that you will get approved, but it does indicate that you are a better match for this particular credit card and therefore have better chances of being approved than the average applicant. It’s important to know what credit score companies consider to be bad versus a fair credit score, so you know ahead of time how likely you are to qualify.

The terms for pre-approval may vary from creditor to creditor, so you should always check a company’s specific terms and requirements before providing any of your personal details. Many times, these companies will make you an offer that fits the best-case scenario, with attractive terms, loan amounts, and interest rates you may never actually receive.

Pre-approval offers generally come by email or postal mail these days, although sales calls and robocalls are still popular means of marketing for many credit card companies.

How Does Pre-Approval Work?

Pre-approval is easy if you have access to the internet. Many credit card companies provide a prompt right on the homepage of their site, requesting your basic information before making a recommendation on which credit card is best for you.

When shopping for credit cards, the last thing you need is several dings on your credit report. Hard inquiries on your credit report can last up to two years.

That’s why many companies do not pull your credit score unless you actually apply, only performing what’s called a soft credit check on your information. A soft check lasts for a few months, so you won’t face long waiting periods while you repair your credit.

Pre-Approved vs. Pre-Qualified Credit Cards

There’s a big difference between being pre-approved and pre-qualified.

A company can tell you that you are pre-qualified, but that doesn’t mean you are approved. It only means the company has done a pre-screening using details like your age, income, mortgage, or profession. A credit card pre-approval is different from a mortgage pre-approval, the latter of which requires a lengthy and complicated process of neverending paperwork and documentation.

Mailers are a good sign that you are likely to be approved, but it is still possible that your application may be denied. This is especially the case if you experience a major life change before you apply, such as losing your job or defaulting on your mortgage. A change in income, collateral, or credit history can all negatively impact your credit report.

Pre-approval means that the company has actually invested some time looking at your profile, while a pre-qualification is more like a blind stab in the dark to see who bites. It is the difference between an educated guess (pre-approval) and speculation (pre-qualification), so pre-approval indicates a greater likelihood of you landing that specific credit card.

Am I Pre-Approved for a Credit Card?

We have all felt the thrill of that shiny new card in the mail, “YOU’RE PRE-QUALIFIED!” stamped across the bottom in bright, enticing letters. That doesn’t mean you have a new credit card just yet, however.

It is best to always exercise caution before sharing your personal details with anyone. Scams and fraud run amuck today, so it’s important that you research company and consumer ratings before moving forward with a new application.

If you fill out the paperwork but change your mind and choose not to keep any of these credit card offers, be sure to dispose of them properly. Shred or tear up paperwork so that your information cannot be retrieved and reused. This helps to eliminate the chance of identity theft.

How to Get Pre-Approved for a Credit Card

Responding to a mailer automatically advances your application, allowing creditors to perform a hard credit check so they can decide whether to approve you. Your credit history and income will be key factors in their decision.

Your credit score will help determine which credit cards might be a good fit for you. Be sure to check a credit card’s credit score requirements before applying. The wrong credit card with too high of a credit score requirement can not only result in a rejection of your application, but you could face exorbitant fees in the future should you be approved. It’s easy and free to obtain a copy of your credit report.

Regardless of whether you receive credit card offers or not, you should still do your due diligence before selecting a credit card. There are many companies out there that will try to entice you with a sweetheart deal, but make sure to read and fully understand the fine print before signing on the dotted line.

A credit card can be a great tool for raising your credit score, but it can also create significant damage when not used properly.

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