Pre-Approval and What It Means to You

Rarely can a consumer say they haven’t been inundated with credit card offers from time to time. The envelopes containing these offers are usually stamped with phrases like ‘You are qualified’ or ‘You have been pre-approved’. The announcements sound like you have already done everything to get the credit card, even though you haven’t done a thing.

What Exactly is Pre-Approved?

You may question the reality of being approved for something you never even applied to get. The truth is, the information the credit card companies have on you is genuine. They got their hands on your financial information courtesy of a third party. Perhaps you have filled out applications for other credit cards or during a purchase you made. If you weren’t paying close attention, you missed the fine print telling you that the information you provide can be sold to other parties for marketing purposes. The third party can purchase your contact information and other financial resources so they will be directly targeting the audience they seek – namely you.

From the data collected, credit card companies can glean financial data which helps to determine your credit status. For instance, if a consumer receives a lot of information from secured credit cards, chances are good the consumer has credit issues. Credit card companies that special in secured cards for people with bad credit can easily ‘prequalify’ consumers and send offers that grab the attention of the right audience.

What Do I Have to Do Now?

If you have received an offer in the mail or via email that appeals to you which states you have been pre-approved for a credit card, make no mistake that the card is not just handed over to you. You will still have to go through the traditional application process and credit check. Since the credit card company offering you pre-approval technically had not looked at your specific credit history or other financial data, you still need to do everything legally by filling out and signing your credit card application. Just because you are pre-approved does not guarantee you will be awarded the credit card. If you have a bad credit history, low score, or no stable income you can be turned down for any card for which you have been deemed pre-approved.

Receiving a pre-approval offer can be a good way to find a better deal if you are thinking about opening a new account. You should never jump on board with any and all offers coming your way. In order to make a more informed decision, you’ll need to review and compare the various offers to see which makes the most sense for you. Select only the cards that make sense with your lifestyle especially when considering a rewards-type card. Keep in mind that every application you compete and submit, whether online or offline, will bring down your credit score a little bit so only apply for the cards you are serious about opening. Choosing the right credit card can boost your credit score and allow you more opportunity for pre-approved deals in the future.