Chances are if you’ve ever shopped for anything anywhere, you get a lot of credit card offers, both in your mailbox and inbox, and some are for pre-approved credit cards. But what exactly does it mean when you’re pre-approved?
For starters, it’s not a guarantee that you’re going to have that card in your wallet anytime soon.
Being pre-approved simply means you’ve been identified by the card issuer as someone who may qualify. Typically, that means that the company soliciting you has contacted data providers like the big three credit bureaus or data miners (also known as “fourth bureaus”) to gather demographic data and other information about you, like your spending habits.
“Just because you’re ‘pre-approved’ doesn’t mean that you will receive the card after the application process,” said Thomas Nitzsche, a credit educator with ClearPoint Credit Counseling Solutions. “Being pre-approved also doesn’t mean that the product being offered is the best you can obtain as far as lowest interest rate, highest limit and/or best rewards program.”
It’s All About Marketing
So what exactly does “pre-approved” mean if you haven’t been screened as a viable cardholder? “Pre-approved” is a sales technique, so it should be viewed as such, Nitzsche said.
Essentially, the phrase is used to get you excited about whatever card is being offered. It’s intended to encourage you to apply by appealing to your sense that you have some kind of special standing in order to receive the offer. In reality, you’re not — at least not to the credit card issuers. (Please don’t tell your mom we said you aren’t special.)
The process of applying for a pre-approved card is essentially identical to that of applying for a card from an issuer that hasn’t contacted you with an offer, “with the exception that the company may have already created a basic profile for you and attached a unique identifying ‘pre-qualified ID’ number, which they may ask you to reference,” Nitzche added. Otherwise, they still must obtain your permission to pull a credit report and collect information and authorizations from you.
Comparison Shop For the Best Card
Because “pre-approved” offers are really just about marketing, it’s important that you treat one of these offers as you would any other credit card application. Carefully review the terms and conditions in the card’s Schumer Box and be sure to compare the offer to other cards. You may find that there are better rates, bigger rewards and other perks available with a different card.
If you’re in the market for a new card or want to see how a recent pre-approved offer stacks up to competitors, you can use Credit.com’s Credit Card Finder as a good starting point. And to improve your odds of approval, check your credit score in advance and apply only for cards that are offered to those with your credit profile. (You can see where your credit stands by viewing your two free credit scores, updated every 14 days, on Credit.com.)