What is a Preapproved Credit Card Offer? And Why Your Application May Still be Denied

Blog PreapprovalCredit@72 (1)

By Eric Rosenberg, MBA
Reviewed by Lauren Bringle, AFC®

“Congratulations, you’ve been preapproved!” Have you ever seen a credit card offer like this show up in the mail? While most unsolicited credit offers that show up in your mailbox or email inbox should be shredded or discarded, it’s a good idea to understand what a preapproved credit card offer is, what preapproved means, and how you should respond.

Continue reading to learn all about preapproved credit card offers and whether you should respond or drop it in the shredder.

In this article

What is a preapproved credit card offer?

So, when a preapproved credit card offer arrives, what does it mean? A preapproval means that the credit card company has taken a brief look at your credit profile and, based on the results, think you could be a good customer for the card in the eyes of the advertiser.

Put another way, a prescreened offer is an invitation to apply for a credit card based on what a lender has seen on a version of your credit report.

If you have a good to excellent credit history, for example, a long list of credit card companies may be willing to hand you a card. Before filling out a formal application for review, the credit card company may preapprove you for one of its cards.

It’s important to understand that preapproval does not guarantee you will be approved if you apply.

Once the financial institution does a hard inquiry after you apply and is able to more thoroughly review your credit application, credit report, and other financial information, they may decide you don’t qualify for the card after all.

It also doesn’t mean you are getting any special offer that they wouldn’t offer other prospective customers with similar credit. However, if you see an offer you like and decide to apply, you have a fairly good likelihood of getting approved.

To preapprove people for credit cards, the credit card issuers pay to get access to credit information, typically from a major credit reporting company like Experian, TransUnion, or Equifax. When creditors access your information for a preapproval offer, it is considered a soft credit card inquiry, which is only visible to you and doesn’t impact your credit score.

You don’t have to be preapproved to get a credit card, and getting many preapprovals doesn’t necessarily mean anything good or bad for your finances. Preapproval is used as a highly-targeted and often effective way of advertising new credit cards to potential users.

What is the difference between preapproved and prequalified?

While they could mean something very different when looking for a mortgage, prequalified and preapproved are often used interchangeably for credit cards.

It is possible that some card issuers would use the terms in a slightly different way. Preapproval could mean a borrower has been more thoroughly vetted than prequalified. But in general, you shouldn’t worry too much about one compared to the other if you are considering opening a new credit card.

Remember, just because you’re preapproved or prequalified doesn’t mean you have to sign up for the card. It just means you likely have a credit score, payment history, or meet other criteria that make you a desirable customer for the credit card company.

Should I accept a preapproved credit card?

In general, you should only accept a preapproved credit card offer if it is a credit card you would have wanted to sign up for anyway. If the card’s benefits, rewards, rates, or other terms are appealing and make sense for your financial goals, it could make sense to sign up. But if your mailbox is regularly overflowing with credit card deals, you should probably pass more often than you say yes.

While getting preapproved for a credit card doesn’t hurt your credit score, applying for a credit card generally leads to a hard credit inquiry visible to other lenders and can slightly lower your credit score. It’s worthwhile to get an inquiry for a credit card that you really want, but signing up for too many cards in a short period of time can signal that you’re a high-risk borrower and could have a bigger negative result for your credit.

If you decide to sign up for a new credit card, it’s important to keep your balance low and always pay on time if you want to build or maintain a good credit score. Paying your balance in full by the due date ensures you will never pay any interest, which is a good habit for credit card users to follow.

Why might I be preapproved but get denied when I actually apply?

As mentioned above, getting preapproved isn’t a guarantee that you’ll be approved for the card when you formally apply. Preapproval means you could be a good fit, but the lender will likely want to conduct a more thorough review of your credit and ability to pay back what you borrow before issuing a new card.

If you have high credit card balances, a history of late or missed payments, bankruptcy, or any other types of legal judgments, you may be turned down for a credit card. The lender will also likely look at your income compared to your current debt and the proposed credit line to ensure you are likely to pay your card as agreed.

If anything has happened to change your credit report since the preapproval offer was determined, you could also have seen a change in credit conditions that take you outside of the lender’s guidelines.

You could also be approved for a lesser offer. If you find that you struggle to get approved for a traditional credit card, a secured credit card, where you make a deposit equal to your credit limit, could be a good choice when establishing or rebuilding credit.

Learn how secured credit cards could help you build credit.

How can I tell what I will qualify for in advance?

There is no guarantee that anyone will be approved for any specific credit card in advance. The only way to know for sure is to apply. However, you can do some research that may give you insights into how likely you will be approved.

  • Credit score: Your credit score is often a major hurdle when applying for a credit card or any other loan.
  • Payment history: Paying your credit cards on time shows lenders that you’re a responsible borrower and improves your approval chances.
  • Debt-to-income: If you have high balances, high monthly credit payments, or would potentially have a tough time with the new credit card, you may not be approved or could be approved for only a low limit.
  • Preapproval offers: It’s not a promise you’ll be approved, but preapproval offers do indicate you’re likely going to be a good fit and might be in a good position for approval.

If you have a specific credit card in mind, you may find the card’s credit requirements online, which can guide you on if it makes sense to apply.

How do I stop getting preapproval offers in the mail?

If you are tired of those preapproval offers showing up in the mail for any reason, you have some power to turn off the tap. Many credit card companies honor an opt-out request you can file online.

The main website to opt-out of preapproved offers is optoutprescreen.com. This is the official website of the major credit bureaus. You can opt-out from specific types of offers, choose between a temporary or permanent opt-out, and manage your opt-out preferences there.

You shouldn’t have to pay for any opt-out service. Anyone that tries to charge you to opt-out of preapproved offers is likely a scammer. Because preapproval offers don’t cost you anything, you shouldn’t spend any money stopping them.

What does preapproval mean at Self?

If you meet eligibility requirements for the Self Visa® Credit Card, you don’t have to worry about applying and getting approved or denied. Instead, the Self Visa® is a secured credit card that is available to any Self Credit Builder Account holder who meets the criteria.

There are no credit checks required. Learn how to start working towards your own Self Visa Credit Card.

About the author

Eric Rosenberg is a former bank manager and corporate finance worker with a Bachelor’s degree and MBA in finance. See Eric on Linkedin and Twitter.

About the reviewer

Lauren Bringle is an Accredited Financial Counselor® and Content Marketing Manager with Self Financial – a financial technology company with a mission to help people build credit and savings. Connect with Lauren on Linkedin or Twitter.

Written on January 19, 2021

Self is a venture-backed startup that helps people build credit and savings.
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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