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Have you been recently receiving credit card pre-approval offers in the mail? If you’ve been responsible with your credit, credit card lenders will take notice.
While I’m sure there’s a little excitement, especially when you get a great offer but you have to be careful.
Pre-approved doesn’t mean “approved” and most of us have been fooled by this at some point and time.
Yeah, it’s true, no one is really “pre-approved.” Credit card lenders know how powerful “pre-approvals” are in their marketing.
While it’s been several years ago, I was pre-approved for a great card and I thought I would get the credit card. After all, why would they go through all the trouble to send me an invite code.
Of course, I was denied, which left me in a sour mood. Before you submit your details for your pre-approval, keep reading this article.
Credit card companies are smart and they have a ton of tools that allow them to screen consumers to see who may be a great fit for specific credit cards.
Here’s a quick example to explain how this works.
Credit card issuers have access to credit bureau data, AKA your information. They can work with the credit bureau and they can get a full list based on their request.
If this credit card company wants a list of names with a credit score of 620 or higher, they can get it. If you’ve been wondering why you’re receiving them, there you go.
If you meet the specific criteria they’re looking for, your name will go on the list and the credit card issuer will send you a pre-approval offer or invite.
Remember, this is not an “approval,” but rather an invite to apply for a credit card, this is the way you should view these types of offers.
Now, the good news, pre-approvals won’t impact your credit scores, they don’t have permission to pull your credit “unless you gave them that permission.”
Now, if you decide to enter their invite or pre-approval code and you apply for a card, you’re going to receive a hard inquiry on your credit report.
The inquiry that comes from your application could hurt your credit score depending on the other information in your credit report.
How to Find Pre-Approved Credit Cards
If you’re not receiving any pre-approval offers, it’s not a sign that you don’t qualify to receive them. Even though that may be the case, you can get pre-approvals too.
Here’s the deal, some credit card companies make it super easy to find out if you've been pre-approved for a credit card. You won’t need a lot of information to find out.
In most cases, you'll only need to enter your basic information, which would be your name and the last four digits of your social security number.
In some cases, an address may be required but most won’t ask for this.
Even with this method, the credit card issuers only do a soft pull, so it won’t bother your credit scores.
Several major credit card issuers allow you to check to see if you have offers, such as Capital One, Discover, Citi Bank, American Express and many others.
Some of you may be wondering, why go through the trouble? Well, a lot of people don’t want to apply for a credit card and be denied.
While a pre-approval is not an approval, it does mean you have better chances of being approved for a credit card.
If you want to decrease the chances of being denied for a credit card, you apply for a card you’re pre-approved for.
Why Credit Card Pre-Approval Offers Aren't What They Seem
Even after receiving a pre-approved credit card offer, you still have to make an application, just as if you'd found the credit card on your own.
Once you apply, the credit card issuer will take a closer look at your credit history and the information on your application to decide whether you actually qualify for the credit card.
In the best case scenario, you're going to get approved for the credit card with the same terms that were listed in the offer letter.
A little less satisfying: you may be approved, but with less favorable terms than what were listed on the offer.
For example, you may be approved for a higher interest rate or shorter promotional period. A worse scenario is possible: you could be denied for the credit card completely.
Free Credit Scores After Unfavorable Decisions
If you do get denied for a pre-approved credit card or you're approved for a card but for less favorable terms because your credit score didn't meet the criteria, the credit card lender will likely send you a free copy of your credit score used in the decision.
In other cases, you could be entitled to receive a free credit report, usually if you're denied because of information in your credit report. You'll have 60 days to request this free credit report.
This gives you the opportunity to get clarity about what's hurting your chances of being approved and work to improve your credit score so if you decide to apply for a credit card in the future.
Always Remember To Shop Around
The pre-approved credit card offer you receive may not be the best offer out there. Before you respond, go online to check the credit card's most recent offers.
You may find something better than the offer you received in the mail.
Shop around can help you make sure you're getting the best deal. You may find a better credit card with another credit card issuer.
Compare the credit cards you qualify for based on rewards, perks, interest rate, and fees.
Stopping Pre-Approved Credit Card Offers
Closing this out, if you’re tired of receiving pre-approved offers, you can limit the offers you receive by mail. There’s a cool little tool at optoutprescreen.com.
Just follow the directions and you’ll stop receiving pre-approval letters.
If you’re concerned about not receiving them in the future, don’t be, You can opt-in again when you’re ready to do so.
By going through this process, it should stop the majority of your pre-approved offers, at least the ones based on pre-screenings through the major credit bureaus.
Even so, it’s always possible to still receive offers from credit card lenders you already do business with or from companies who got your information from somewhere besides the credit bureaus.
You can still use the major credit card issuers' online pre-approval tools to shop around for credit cards when you're ready to apply for a new credit card.
Credit Shout is a community of personal finance experts dedicated to helping you save money and make smart financial decisions. Learn how to master your credit card rewards, improve your credit score and start eliminating your debt.