There are many things that affect credit score; your credit history, payment history, the amount owed, credit mix, and new credit are among these things. But what about applying for a pre-approved credit card? Does it have any effect on your credit score?
Applying for a pre-approved credit card doesn’t affect your credit score because creditors only place a “soft pull” on your credit report to know your eligibility. You will only notice an impact if you go on with the application.
Applying for a pre-approved credit score might seem like a good idea until you hear that it affects your credit score. But is that true? Does applying for a credit score down your credit score? You’ll have to read on to find out.
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Does Applying for a Pre-approved Credit Card Affect Credit Score
Getting a pre-approved credit card offer can be thrilling. After all, this means a creditor has prescreened details on your credit report to determine your eligibility, and they think you may meet their requirements based on what they discovered.
Even so, you may be thinking if pre-approved credit card offers affect your credit, and if so, how much. This post will explain the perks of pre-approved offers while answering this crucial question.
What Is a Pre-approved Credit Card Offer?
Based on the Federal Trade Commission (FTC), multiple banks and insurance companies use prescreening to help determine potential customers for their products. As such, pre-approved offers of credit are based on info in your credit report that signals you could be an ideal candidate for an offer.
Ultimately, your profile may make it on a pre-approved offer list in one of two ways:
- A credit might establish minimum criteria, like minimum credit score, then contact customer reporting agencies for assistance in putting together a list of customers who meet that requirement.
- On the other hand, the creditor might compile their list of potential customers and give it to a consumer reporting company and the goal of having them pick out individuals who meet certain criteria they set.
How Does Credit Card Pre-approved Work?
Credit card companies prescreen potential cardholders and send promotional and marketing offers, informing them they are pre-approved or prequalified for a card. After you get the prescreened offer in the mail, you can apply for the credit card to know if you are approved.
During the pre-approval procedure, you’ll need to present information such as your name, address, gross annual income, monthly rent/mortgage payment, Social Security number, etc. As soon as you submit the form, you’ll discover if you have been approved for the credit card.
If you aren’t given a credit card, the issuer will send you an adverse action notice. This notice will spell out why you were rejected for credit, your credit score (if used as criteria to turn down your request), the name, address, and phone details of the credit bureau that provided the information. You’ll also be given a free credit report if you are turned down because of information in your credit report; you’ll have about two months to ask for this report.
You can use this window to determine what is damaging your chances of being approved and work to boost your credit score.
Does Pre-approved Credit Card Offers Affect Your Credit Score?
The good news is that pre-approved credit card offers don’t affect your credit score. That is because creditors only place a “soft pull” on your credit report to determine your eligibility.
You’ll only see an effect if you proceed with the application. In that case, a “hard pull” will be placed on your report, and a hard pull is different from a soft pull. A hard pull shows creditors you applied for a line of credit, and it can affect your credit score in the short term.
Benefits of Pre-approved Credit Cards:
Pre-approved credit card offers can be helpful if you aren’t sure you’ll be eligible for a credit card but aren’t quite ready to apply. If your credit score is good but needs some effort, for instance, you can check to see if you even have a chance at approval before proceeding with a full application and facing a hard pull on your credit report.
Not only that, but some pre-approved credit card offers can be more lucrative than those advertised to the general public. For example, a pre-approved credit card offer can come with:
- Higher registration bonuses on rewards credit cards
- Higher introductory earnings on cash back credit cards
- Promotional rewards offer for more points on spending
- Longer introductory APR offers on balance transfer credit cards
- A lower interest rate
In any of these situations, you could get a “better deal” on a credit card than you could if you applied on your own. This is one reason pre-approved credit card offers are worth considering, irrespective of your credit score and income.
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Raise Your Chances of Credit Card Pre-approval:
Improving your credit score can raise your chances for prequalification. You can do this by not racking up debt on your credit, settling your bills early, not maxing out credit cards, and avoiding opening or closing several accounts.
From there, take steps to be proactive about the situation. With the help of Bankrate’s CardMathc Tool, you can enter some simple information and see if you are approved for the best credit card offers within a minute. Using this tool won’t affect your credit in any way, and you could determine if you qualify for better bonus offers.
