What Does Credit Card Pre Approval Mean

It simply means the credit card provider can do a soft pull on your credit. What Does Credit Card Pre Approval Mean. Let's explore

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  • In this short 6 minutes read article, we shall answer:
  • What does preapproval mean
  • How to get your free credit report and more

You received an offer letter in the mail or by email

This is exciting. Just when I need some credit to take care of some issues. “You are pre-approved fox X amount”. But what does this credit card pre-approval mean? There are two ways you received the offer:

  1. The credit card company obtained your info from the credit reference bureaus and made you an offer. Since they obtained your name, address, and maybe some more info, they are able to send a “prescreened offer”. You can opt out of receiving prescreened offers here.
  2. You may have clicked on an ad and submitted your info to a credit card company or a marketing company on behalf of the credit card companies

What are the benefits of receiving a prescreened offer?

  1. You may get a very attractive and competitive offer with low APRs.
  2. If you receive multiple offers, you can pick the best offer that works for you. 

Before responding to the offer, use this time to research and learn more about all offers. When you respond you will be well informed and push for better offers

What does credit card pre-approval mean?

After you respond to the offer, you essentially give the credit card company permission to do a soft pull on your credit report. (You can read about a soft pull here). A soft pull on your credit does not affect your credit report negatively. It essentially confirms your details such as name, address, and the credit card company can see your credit score but not the entire credit report. 

Even though they say you are pre-approved, they may deny you the offer at this point if your credit score does not meet their requirements for qualification. 

 

What is a credit card prequalification?

It is at this point that you authorize the credit card company to proceed. They then do a hard pull on your credit. A hard pull is when they get access to your full credit report. Your full credit report has all your credit history. All past and present credit accounts over the entire length of your credit history. 

 

What is the difference between preapproval and prequalification?

They are both very similar and often used interchangeably. The difference comes in who (between you and the credit card company) made the first move. If you made the initial inquiry, it is a prequalification. If the credit card company sent you an offer, they refer to it as a preapproval. They probably see a positive response using preapproval in their marketing efforts. 

 

Are you denied or approved?

They may issue you the credit card with the original offer they offered you in the beginning if you meet their criteria. If not they may offer you less favorable terms or deny you. If denied they should send you a copy of your credit report they used in making that decision.

 

Check your credit as you should

You are entitled to a free credit report once every year. With identity theft on the rise, it is important to stay on top of what your credit report says. Avoid surprises next time you seek credit. Check your credit report today.