Don’t you love the sound of a swiped card? It basically means you can have got full rights on a product or a particular service. Having a credit card makes life easy! You know the credit card limit, but shopping with it makes you feel powerful. Before riding on a mighty horse, you need to be aware of the eligibility and conditions for approval to get your hands on a credit card. We shall explain an important concept in this post regarding Credit Card Pre-approval.
Does your snail mail mailbox get inundated with credit card offer mails every week? Don’t worry, you’re not alone. It’s just like any other American to have this problem. Most of these mails contain fancy marketing words like pre-selection, pre-approval or pre-qualification.
But, what does it mean to have a pre-approved credit card? And, does that make a difference to you? Will these marketing ploy words to just grab attention? It definitely is. Do you need to reply to these cold mail offers? You do not. How do you find a card for pre-approval? There are many questions hovering over your mind, and we shall answer all of them one-by-one.
Let us explore what being pre-approved means to you and how to find the best offers that works for you
What is Credit Card Pre-Approval?
Everyone in this world is moving around with certain criteria. Just like you need eligibility for a job or even a suitable match for marriage, credit card companies have an initial criteria to give you pre-approval.
The credit card issuers are looking for a myriad of ways to endorse their credit cards to the keen customers who are looking to apply. Giving credit card pre-approval is one way of doing that.
These issuers set a basic criteria such as a minimum credit score. They do a soft check/inquiry which does not pose any threat to your credit score. Pre-screening the prospective customers is important.
Once this is done, the issuers send a mail to the prospective consumers to announce whether they have been preapproved. This is just the initial stage! Once you get the email, you can apply for a card.
Please remember this is just the card pre-approval. You have not got the approval as of yet! However, you can still apply. The card issuer will then do a credit score and report check. This is not going to be a soft check! The issuers will do a hard check and it DOES have an impact on your credit score.
Note – This is to remind you that pre-approval does not mean that you have got approved to get a credit card. Pre-approval is a marketing gimmick to endorse the card to prospective consumers. The customers cannot skip the hard check of credit score. It is an important step to get approval for a credit card.
How To Find Credit Cards for Pre-Approval?
The World Wide Web is filled with offers. Thanks to search engine optimization, the youth are able to find credit cards that offer pre-approval. But, you will also find these promotional mails in your email inbox.
Credit card preapproval is a good way to attract the prospective cardholder. That’s because the card issuers want to attract the attention of new customers. These mails could lure you with bonuses and exciting deals with low interest rates.
You can also explore the local banks and ask for the current offers. The majority of the banks offer credit cards. If you are asking them directly, it is possible that they might disclose the pre-approval offer.
You necessarily don’t need to wait for a pre-approval offer from credit card issuer. You can check it yourself online by entering your personal information and see you if you have a potential pre-approval.
So, you may want to visit all credit card websites that you have a relationship with. Then, by just entering some basic personal details, they will let you know the status instantly from pre-approval perspective.
If you’re looking for new credit, it can help narrow down from large options by checking which ones will approve you if you apply.
After you give your basic details, the card issuer will do a soft credit check, to analyze cards that you qualify for. You may get other offers too together with pre-approval credit card offers from the same issuer. In almost all cases, it will generally only include basic offers that are available for free online.
However, you may get lucky by proactively checking and landing a special bonus or 0% introductory APR or increased signup bonuses. If you have exceptional creditworthiness, the deals may become sweeter.
What Is The Difference Between Pre-qualified, Pre-approval And Pre-selected offer?
Some credit card issuers might use both the terms interchangeably. Pre-qualified could also refer pre-approved. But, there are some issuers who mark the differences between the two.
Prequalification refers to a less rigorous check of your finances. Preapproval may require more details to be disclosed such as personal and financial information. However, both these terms do not guarantee approval.
With credit pre-selected offer, the card issuer mostly pulled your details from mailing list and sent you mail from shared marketing info. It is really low cost for them. They just send it and pray you engage with their offer.
Generally, pre-approval and pre-qualified mean the same thing as per the credit issuers. These are just pre-screened offers that the credit card company sent to a number of people. You meet the initial criteria, but a hard check has not been done as of yet.
Both pre-approval and pre-qualification do not impact your credit score. However, to get approval for the credit card, the issuer does a hard check and THAT affects your credit score.
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Make sure you are totally aware of what each of these means, before applying for new credit card. Otherwise, your credit score will take a bad hit. You don’t want to be in a bad situation when you can read these up and take action in five minutes.
Getting pre-approved or pre-selected or pre-qualified is not the hardest part. You are naturally a target for these credit card issuers doing heavy analytics with personal data. But, getting your final credit card approval matters.
What Does It Mean To Be Pre-Approved For Credit Card?
Let’s say you are a potential cardholder. You want to apply for a card so you go through different card issuer websites. Most of the card issuers market their card in a way that customers get lured. Pre-approval is one of the ways the issuers market their card. It is a good starter, but it does not guarantee approval.
The credit card companies will pre-screen potential customers and send out a mail with all the promotional offers. This is only a pre-screening phase and not a guaranteed promise that you will GET a credit card.
You can apply for the credit card after receiving the mail. The card issuing company will do a hard check. Let’s say if you have a very poor credit score, there is a high possibility of getting denied. An adverse action notification will be sent to you.
It is good to maintain a good credit score to get guaranteed approval. The card company looks at your annual income, monthly rent/mortgage/other payments, address, job profile, and credit score before giving approval. If you are a responsible citizen who has no history of default payments then there are high chances of getting approval.
One of the benefits to pre-approval aspect of credit cards for shopping is you can plan your huge purchases around new credit card. Card issuers only take a high level look with a soft inquiry into your credit profile.
The card issuer is not pulling the complete credit report. By doing this, you will gain insight on what they think they can approve you for. If you think, that’s the best card for you, then you can formally apply.
After applying, they do a hard check completely analyzing your credit report by pulling it once. While the credit score is temporary drop, you still want to avoid multiple hard inquiries in a short time. Otherwise, credit card issuers will see you as a risk.
What Are The Easiest Cards To Get Credit Card Pre-approval?
The credit card issuer will look at the following things to give you approval:
- What is your occupation?
- What’s the credit score?
- What is your income?
- Do you have any pending mortgage payment or monthly rent to pay?
The easiest card to get depends on your financial situation. Are you a student? Do you have credit score history? Do you have a bad credit score? If any of these apply to your situation, then you can access different types of cards. There are student credit cards that are specially designed for students, helping everyone getting out of their teens.
Secured credit cards require a cash deposit. If you use the credit card responsibly, the issuer will be able to assess your spending and repaying behaviour. You can easily apply for an unsecured credit card later on (with a good credit score).
Hence, the easiest card to get is the secured credit card, starter card, or the student credit card.
Does Pre-Approval Guarantee Approval If You Apply?
You need to remember two things while applying for a credit card. Pre-approval process means that the issuer will do a soft check. They will ask you the following personal questions
- What is your name?
- What’s your address?
- What is your social security number?
- What’s your gross annual income?
As you can see, these are non-intrusive and basic questions. Hence, it does not even affect your credit score. But, if you are applying for the card after getting credit card approval, the real action begins.
Hard check is something that everyone is afraid of, because it affects your credit score.
The card issuers will be analyzing your credit score and on the basis of that, they could reject your credit card application.
These are the just two things you need to keep in mind.
- Soft check does not do damage to your credit score.
- Hard check can affect your credit score. It could also be the reason for rejection.
It is possible that your credit card approval process is still in WIP status. If the existing credit score is good, then there is a high possibility of getting approval.
Credit card preapproval is not a sure-shot way to get approval for a credit card. It is important to maintain a good credit score, else it will affect your future financial plans.
So, make sure you clear all your debt. If not, get a secured credit card by depositing the minimum amount. The credit card balance/limit goes up as per the deposit you make.
If you have nothing to worry about (good credit score, no debt), then apply for the credit card to get approval. Payment cards product Pre-approval is just a way to introduce you to the world of new credit cards!
While you may think there is no analytics that goes into sending mass marketing of credit card offers, but that’s not true. There is definitely solid analytics behind the madness.
As a consumer, understanding differences between pre-selected and pre-qualified and pre-approved is important. You also need to know how the credit issuer interprets too. This will make getting the perfect match credit card for you easier. Just make sure to check the terms and conditions of every credit card issuer, so you know fully what you are getting into.
Don’t always neglect credit card offers you get. While most contain starter credit cards, some can land in you a gold mine offer with extra perks.
Also, if you are planning to add new credit card, researching your options with card preapprovals can provide better benefits. In most cases, card pre-approvals help protect you from multiple hard inquiries. And, it also provides you leverage for better targeting credit cards that work for you.
Just make sure to remember, preapproval doesn’t mean actual credit card approval. But, it’s a perfect indicator to denote new credit cards are closer to getting approved.
I am a data analyst by profession who loves to crunch numbers at daytime and come home wondering how my passive income numbers for the day look like. I believe in being rich rather than looking rich. Follow me for Cryptocurrency, FIRE, Personal Finance, Credit Cards and Digital Nomad updates