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When you first consider buying a new home, getting pre-approved for the mortgage is standard operating procedure.
In today’s market, many real estate agents won’t even show you homes unless you show pre-approval from a bank or mortgage company. This saves everyone time and disappointment, as real estate agents won’t waste time showing you homes out of your price range. It also preserves your credit score, since pre-approvals are considered “soft” credit inquiries and do not adversely impact your credit score. You can learn more about hard and soft credit inquiries in the article XX.
Can you avoid hard credit inquiries by seeking pre-approval for credit cards and other loans? Pre-approvals for credit cards, personal loans and car loans are not as easy to find as lenders who will pre-approve you before you get a mortgage, but they can be had if you know where to look.
Here are a few ways to get pre-approved offers or to seek out pre-approval for a credit card, bank loan or car loan.
1. Keep your credit file clean and “opt-in” to receive special credit card offers by mail.
It was a sign that my credit score is in good shape when I got a pre-approved offer for a Discover More card with 0% interest until September 2011 the other day. In fact, thanks to timely payments, my FICO score must have made quite a jump (more than the few points that Creditkarma.com shows.) Prior to this, I’d been receiving offers for people with “fair” credit — not “good-to-excellent.”
You, too, can enjoy great pre-approval credit card offers with low intro APRs on quality rewards cards. Just keep your credit score high and “opt-in” to receive pre-screened offers. These pre-screened offers do not affect your credit score.
If you opted out in the past in order to minimize junk mail, help protect your identity or because you thought pre-screened offers affected your credit score, opt in by going to www.optoutprescreen.com and selecting “opt in.” You can always opt out again after you get the credit card you want.
2. Call your bank, credit union or credit card company. It never hurts to ask if a credit card provider has any pre-approved offers. They can quickly check to see if you qualify and give you the offer.
3. Look for pre-approved auto loan offers online. CapitalOne.com lets you go online to get pre-approval for a car loan. This can make the car-buying process go more smoothly, as you’ll know how much car you can afford and what interest rate you’re likely to get. Other banks and lenders offer the same service — it’s very similar to shopping around for a mortgage and getting pre-approval before you go shopping for your new home. Many lenders — including Capital One — will issue a “blank check” good for up to the amount of your pre-approval. This gives you the upper hand in dealing with car dealerships, since you are a customer who is ready to buy, with a piece of paper that is as good as cash in hand.
Before you seek pre-approval for any loan, request copies of your credit report from all three lenders, take steps to dispute any incorrect items on your credit reports, and then check your FICO credit score.
Having a pre-approved loan offer will also protect you against dealers who use credit scores other than the FICO score to determine your eligibility. You may save a significant amount of money in interest when you get a pre-approval for a car loan.
Pre-screened credit card offers also typically have better terms than offers you would seek out. If you’re shopping for any type of loan, getting pre-approved is the smart way to do it.