What is a Credit Card Pre-Approval?

A pre-approval for a credit card is essentially a greenlight invitation to apply for a credit card. Creditors send these out when potential borrowers meet the initial criteria for approval of any given lending product (whether its a credit card or loan makes no real difference). A pre-approval is based off generic credit data (typically including credit score, delinquencies, utilization, credit history, etc.) However, a pre-approval does not necessarily mean that you are approved for any particular credit card! You can still get rejected for a credit card that was pre-approved! Although a pre-approval is somewhat important for a credit card application, it is much more important for a home purchase or mortgage application. Being pre-approved for a mortgage demonstrates to lenders and your home seller that you are a serious buyer! Credit Card pre-approvals are also important in that they allow you to see if you are likely to qualify for a credit card without having to pull and possibly ding your credit score via multiple inquiries.

How Do Pre-approvals Help Consumers?

Getting a pre-approved can help you as a consumer since it gives you a rough estimate of where you fall in regards to what products you qualify for. This will in turn allows you to more easily compare and contrast different credit card offers and different pre-approvals without having to fill out formal applications for cards you might not want.. Moreove, many pre-approvals can come with some type of promotion so they can aslo help you save money in interest during the initial stages of your credit card account.

How Do You Get Pre-Approved?

Getting pre-approved for a credit card offer is relatively simple! Most credit card companies have a simple form to fill out online. You enter your legal name, address, date of birth and sometimes your social security to check if you are pre-approved. Once you fill out the form, a soft credit check is pulled and the lender lets you know of your approval or rejection.

What’s a Pre-Qualification

A pre-qualification is not as good as a pre-approval! Pre-qualifications are often times a lot less stringent in terms of parameters and are offered when the lender has less information about your finances. On the other hand, a pre-approval is more preferred, since it is typically based on more specific credit data.

Who’s a Good Candidate for Pre-Approval?

Individuals that are considered highly credit worthy will be good candidates for pre-approvals. However, this also depends on the credit range you are in and the specific credit card you are applying for. Many credit cards fall into different categories with approvals focusing on good credit, bad credit, exceptional credit, etc. With this in mind, anyone that falls into a specific credit profile for a credit card could be considered a good candidate!

Do Pre-Approvals Apply to Other Forms of Credit As Well?

Yes, the benefits of getting pre-approved definitely apply to other credit applications. Even more so with other credit applications since these all tend to be higher issuances of debt. Pre-approval is most important for larger purchases like a mortgage or auto loan.

What Should You Avoid?

The main thing consumers should avoid is "over-applying for credit" and "performing too many credit pulls". If you apply for too many different credit cards, this could actually ding your credit score to the point it causes your pre-approval to turn into a rejection. This is actually the most common reason a pre-approved application can turn into a rejection.

What Should You Do If They Can’t Get Approved Anywhere?

If readers cannot get approved for a credit card they have a few options available to them. First, you can apply for a "bad credit" credit card. If you don't qualify for the following you have two options left. Your next step should be to try and improve your credit score and re-apply down the line. If you don't see your credit score improving in the short term, you should highly consider applying for a "secured credit card". You will not get rejected for a secured credit card since it is backed by physical cash and it has the added benefit of improving your credit score in the long term (since it's a secured debt)! The only downside here is that you will have to back the secured credit card with cash, so you are not actually being extended credit.

Credit Advice

Don't overshoot for unnecessary credit cards that you might not qualify for and do not pull your credit too many times! Pulling your credit multiple times will ding your credit score and is the main reason you as a consumer might get rejected on an application. From a lender's perspective, if you apply for too many lines of credit, this could depict you as "desperate" or credit seeking and will likely lead to your applications being rejected.