Credit Cards

Does ‘Pre-Approved’ Guarantee I’ll Get a Credit Card?

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Nearly all of us have received an offer in the mail at some point indicating that they have been “pre-approved” for a new credit card. These offers, which include an application, are meant to entice recipients into applying for a credit card. After all, pre-approval sounds so good, perhaps it actually guarantees that their application will be accepted.

What ‘Pre-Approved’ Really Means

Banks and other lenders aren’t allowed to take a peek at your credit history without your permission. So what they do is purchase from credit bureaus a list of people who meet the general criteria they desire. Then, they send out a bulk mailing of “pre-approved” offers.

So does that mean approval is guaranteed? No. Customers still need to fill out an application, which card issuers can still reject. For example, details in a particular applicant’s credit history could be outside the card issuer’s criteria, even though the applicant fit the general profile the bank was looking for when it purchased the list. Or an applicant’s credit history may have changed since the original list was created. For instance, applicants may have incurred more debt, applied for other loans or missed payments — all of which could hurt their chances to be approved for a new line of credit.

What Should You Do With a Pre-Approval?

Remember, the idea behind these offers is to encourage you to apply for that particular offer, whether or not it is the best card available. As with any important financial decision, you should take the time to compare several of the card offers currently available and choose the one that best suits your financial needs. (In fact, Credit.com offers a free credit card selection tool for this purpose. If you sign up for the free Credit Report Card, the tool can match you to the cards you’re most likely to qualify for based on your credit profile.)

If you decide not to apply for an offer, it is important to shred the mailing to prevent anyone else from fraudulently applying for this card in your name. In addition, if you do not wish to receive these offers in the future, you can go to OptOutPrescreen.com to have your name removed from these lists. This is the official website used by all of the major credit bureaus to handle requests to opt in or opt out of offers for both credit and insurance services.

While it might be tempting to opt out and avoid future “pre-approved” offers, there is a downside to doing so. On occasion, cardholders can receive offers that include sign-up bonuses that are greater that what is available elsewhere. These offers are targeted based on your credit profile and possibly an existing relationship with a credit card partner. For example, an airline might team up with a bank to send pre-approved offers to frequent fliers in a particular region. Likewise, your favorite retailer might target you based on the fact that you are one of their frequent customers.

The popularity of pre-approved credit card offers is a strong indication of how competitive the credit card market is, yet these offers are never a guarantee of approval. By considering each offer and comparing it against competing cards, you can choose the best credit card for your individual needs.

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