Everything You Need to Know about Pre-Approved Credit Card Offers

When you’ve been wanting to obtain a credit card and you receive a pre-approved offer in the mail, it can seem like an answer to your prayers. Especially so if the offer boasts of not just rock-bottom interest rates, but also a great rewards program. Nevertheless, be aware!  Just because the letter says pre-approved doesn’t mean it really is that way. In fact, once you respond to the offer you might get rejected, and your credit score may also take a hit.

So, what is a pre-approved offer really?

Well, pre-approved offers are more like conditionally approved offers. What happens is this. Credit card companies approach credit bureaus and, for a price, obtain a list of consumers who fit certain criteria. For example, a card company may request a list of people who have credit scores between 680 – 700. Thus, if your credit score falls into this range, you may receive a pre-approved credit card offer, which is more like an invitation to apply for that particular credit card.

Does a pre-approved offer affect your credit score?

When you receive an offer for a pre-approved card, it means that the card issuer has a rough idea about your credit, but has not really checked your report. So, getting a pre-approved offer means that a soft inquiry has taken place, and this has no effect on your credit score. But once you respond to the offer, the card company will pull your credit report to check your history. This will lead to a hard inquiry and can possibly ding your credit score.

Can a consumer’s application for a pre-approved offer be denied?

Applying for a pre-approved card can have three results. Depending on your credit report and the information that you provided in the application form, you may receive a credit card with the same terms and conditions that were advertised. Or, you may qualify for a card with less attractive terms than what was listed in the offer. The worst-case scenario is that your application may be rejected altogether.

It is not uncommon to find that applicants who received a pre-approved offer for a card were denied when they put in their application for it. This is because in many cases, the consumer mars his credit between the moment he is put on the pre-approved list and the time that company checks his credit score. Something as trivial as making just one late payment can set an individual back by several points, thereby becoming disqualified for the pre-approved credit card.

What are your options if your application is rejected?

If your application for the pre-approved offer gets you a card with less-favorable terms, say a higher interest rate, you can cancel it. However, that will leave you with a lower credit score (due to the hard inquiry), and you won’t even receive the benefit of your improved credit utilization ratio due to increased credit. A better approach would be to call up the customer service number on the back of the card and request an upgrade. If you tell them that you will cancel the card unless you receive more favorable terms, the card company may just give in to your request.

On the other hand, if your application is rejected outright, you can request a copy of your free credit report within 60 days of the event. By carefully scanning the copy, you’ll get an idea of what went wrong and in what areas you should improve to increase the possibility of being approved the next time around.

Tired of Too Many Calls?  Opt Out

If you decide that you don't want to receive prescreened offers of credit and insurance, the Federal Trade Commission’s website offers that you have two choices: You can opt out of receiving them for five years or opt out of receiving them permanently. Per their website:

To opt out for five years: Call toll-free 1-888-567-8688 or visit www.optoutprescreen.com. 

To opt out permanently: You may begin the permanent Opt-Out process online at www.optoutprescreen.com. To complete your request, you must return the signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.  

Note that when you call or visit the website, you'll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out. 

Many consumers apply for pre-approved credit card offers with the hopes that once they get it, they will be able to get additional credit to fund their business, a property, etc. For such people, being denied or rejected can be a major setback. A better approach is to call us at Fund&Grow. Our team helps clients with reasonably good credit obtain $50,000 - $250,000 of unsecured credit at 0% interest for a period of 6, 12 or 18 months. These funds can be used for virtually anything. So, if you need this kind of financing, instead of running after pre-approved offers, you can call us up at (800) 996-0270 and we’ll be able to let you know straight away how much credit you’ll be likely to receive. This way, you’ll not only save your credit score from taking a hit, but also receive virtually guaranteed funding.