Pre-Approved for Credit Card Offers: Are You Pre-Qualified?
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Have you ever received something in the mail to indicate that you are "preapproved" or "prequalified" for a new credit card account? If so, then you've probably wondered what this means, and why you've received it. The answers may surprise you.
What These Offers Mean
Credit card issuers are allowed to purchase data in bulk from consumer credit bureaus, and they scan that information to find people who are likely to be approved for a new account. The data will typically include your credit score, your zip code, your age, and other general factors. Thankfully, these inquiries to your credit information do not affect your credit score in any way.
But even though you may have received one of these offers, there is no guarantee that you will actually be approved when you apply. First of all, the parameters that the card issuer used to generate your preapproval or prequalification are approximate, and the card issuer still reserves the right to deny you based on additional information that you provide in your application. Furthermore, the information it received to generate your preapproval could be out of date by weeks, or even months. So if you have recently applied for several new lines of credit, or worse, failed to make on-time payments to one or more of your accounts, your credit score will suffer and your application could be denied.
The Difference between Preapproval and Prequalification
In the mortgage industry, the terms "preapproval" and "prequalification" can have different meanings. A prequalification is generally the first step in the mortgage approval process where you get a general idea of the size of the mortgage that you can qualify for. In order to get a preapproval, you usually have to completed a full mortgage application, provide documentation on your finances, and have a credit check run.
But when it comes to credit cards, the terms "preapproval" and "prequalification" are used interchangeably to indicate the same thing, that a card issuer feels that you may be approved for a new credit card, based on some preliminary data on you that it purchased from a credit bureau. In addition, you may sometimes see the term "prescreened," which also means the same thing.
Checking to see if you are Pre-Qualified
Here is a list of the main banks and where you can check to see if you are pre-qualified. We will continue to update this list over time so you can select the bank you prefer and see which credit card offers are available.
- American Express
- Bank of America
- Capital One (Highly Recommended. Great Tool!)
- Credit One
- U.S. Bank
- CreditCards.com Cardmatch (Recommended. Find offers from several issuers!)
What Should You Do With These Offers
Just because you received one of these offers in the mail, it isn't necessarily a reason to celebrate. If you are interested in applying for that particular card, then you should check to make sure that you received a competitive offer. For example, you might find other offers online that have a higher sign-up bonus, a waiver of the first year's annual fee, or more generous promotional financing terms than the offer you received in the mail.
Nevertheless, you may receive a preapproved or prequalified offer that is as good or better than what is available online (sometimes they selectively offer better sign up bonuses that aren’t available to the general public). But even if this is true, you will want to make sure that the card is the best one available for your needs.
By understanding the meaning of these terms, you can select the ideal card offer, and not give too much weight to marketing material labeled with enticing offers of preapproval or prequalification.
How to Position Yourself with Special Offers in the Future
You'll receive the best special offers in the future if you have a higher credit score. If you have had credit problems in the past or you are working on building your credit, you may not find the offers you receive to be the most attractive. However, if you continue to make your payments on time, keep your balances low, and manage the accounts you have responsibly, over time, your credit rating will increase and you'll see a change in the prequalification offers you receive.