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Pre-Screened Credit Card Offers: What You Need to Know

May 30th, 2017 · No Comments · Credit Cards

by Kristy Welsh

(Last Updated On: May 30, 2017)

Pre-Screened Credit Card Offers: What You Need to KnowWhether your credit is good or bad, it feels good to receive a pre-screened credit card offer. That little surprise in your mailbox that says, “Congratulations! You’re pre-approved.” It can also be annoying, though, watching all of these unsolicited offers pile up. Besides that, what does pre-approval really mean? And is applying for one of these offers really the best way to build better credit? Get answers to these questions (and more) about pre-screened credit card offers.

What is a pre-screened credit card offer?

If a credit card issuer makes you a “pre-screened” credit card offer, it means you meet certain minimum criteria they are looking for in new customers and that, if you apply, there is a good chance you will qualify.

Is a “pre-screened” credit card offer the same thing as a “pre-approved” or “pre-qualified” offer?

Yes. This may be confusing if you are familiar with the mortgage application process. As credit card expert Jason Steele explains, pre-approval and pre-qualification mean different things in the mortgage industry. But as far as credit cards go, pre-approved, pre-qualified, and pre-screened all mean the same thing.

If you receive a pre-screened credit card offer, does that mean you are approved for the card?

No. When a credit card issuer sends you a pre-screened offer, it is doing so based on limited information. They have to wait until you actually submit an application before they can get a look at your credit report or verify your employment and income.

It’s also possible that your credit situation has changed since you were added you to the pre-approved list. Your credit could be in worse shape by the time you receive the offer, in which case you would not qualify once you submit the application.

Example: Capital One

Consider the opening line of a letter from Capital One in a recent mailing for a prescreened credit card offer: “We’ve matched you with an exclusive card offer that you’re preapproved for.”

Translation: You are preapproved to receive the offer, not the card.

On the back of the second page of this letter, Capital One makes this fact crystal clear:

“The fact that you’re pre-approved simply means you’ve met the initial criteria for this credit card offer. Here are some reasons you could be declined after applying for this card:

  • You’ve applied for another Capital One card 2 or more times in the last 30 days
  • You didn’t list a physical address on your application (P.O. Boxes cannot be used)
  • You didn’t complete all application questions, including providing your Social Security number
  • Some of your information from the credit bureau may be missing or unavailable, or your score has changed
  • Your credit obligations (such as those reported on your credit bureau report) are too high compared to your income

“For more eligibility details and income requirements, please refer to the Account Terms.”

In these Account Terms – a separate enclosure in the same mailing – there is an even longer list of reasons why you could be turned down if you apply for this pre-approved offer. This includes several scenarios in which you already have a history with Capital One (good or bad).

You could also be rejected if your “monthly income…doesn’t exceed [your] monthly rent/mortgage payment by at least $800. Or Capital One otherwise determines that [you are] unable to make [your] monthly payments.”

Do pre-screened credit card offers include better terms than you can find anywhere else?

It’s possible, but don’t count on it. You may receive a pre-screened offer from a credit card company that has better terms than are available to the general public. But that’s not always true. And even if it is, you may be able to find even better terms through a different credit card company. The only way you’ll know for sure is to compare the terms of the pre-screened offer with other credit card offers – from the same issuer, as well as others.

There are numerous credit card comparison sites to choose from, including Bankrate, Credit.com, Credit Karma, Credit Sesame, NerdWallet, Quizzle, and Wallethub.

Anyone can use the tools on these sites to compare credit card offers. But if you sign up for their free credit monitoring services, you may also see credit cards recommended for you based on the information in your credit file (as credit monitoring requires access to your reports and scores). Be just as discerning about these recommendations as you are about pre-screened offers you get in the mail. They may be your best bet, or they may not. Use their free tools to compare the recommended cards to others on the market.

Do pre-screened credit card offers affect your credit score?

No. There are two types of credit inquiries:

  • Hard inquiries are requests to see your credit from creditors that you have given permission to conduct a credit check. For example, if you apply for a credit card or installment loan, it will count as a hard inquiry. Your credit score will take a hit, but not by more than 5 points.
  • Requests made without your knowledge are considered soft inquiries that do not impact your credit score. This is the type of inquiry made when you are pre-screened for a credit card offer. Though the list of companies that have made soft inquiries about you will be listed on your credit reports, that is only for you to see; soft inquiries are not included in credit reports provided to potential creditors.

By the way, it also considered a soft inquiry when you check your own credit, so never hesitate to do that. And other types of inquiries could be hard or soft (e.g, when you submit an application to rent an apartment, rent a car, get a new cell phone plan, open a new utility account, or get an insurance quote).

Are pre-screened credit card offers good for bad credit?

One of the best ways to repair bad credit is with the responsible use of a credit card. The challenge is in finding a card your bad credit qualifies you for. If you receive a pre-screened offer, chances may be good you will qualify for it if you apply, but there is no guarantee. Also, the terms of the pre-screened offer may not be as favorable as others you could find through credit card comparison sites.

Bottom line, as good as it feels getting any sort of offer when your credit is bad, never assume it’s the best you can do. And keep in mind that, depending on how bad your credit is, you may need to start with a secured credit card.

How does your name get added to a pre-screened offer list?

Credit card issuers pay the credit bureaus to help them pre-screen potential customers for their credit cards. This might seem counter to the rules of permissible purpose that determine who can have access to your credit, but there is a difference.

Those with permissible purpose to see your credit file include companies you have given permission to check your credit, as well as debt collectors (who have the right to collect on a debt you owe), and certain government agencies. Your credit may also be accessed by court order or subpoena.

As for credit card issuers making pre-screened offers, they aren’t actually given direct access to your credit file. The FTC explains how it works. Here’s the gist of it:

  • The credit card issuer gives a credit bureau a list of criteria they are looking for in potential customers. The bureau searches its database for consumers who meet these criteria. Those that make the cut are then added to a list of pre-screened consumers that is provided to the credit card issuer.

OR

  • The credit issuer actually provides a list of names to the credit bureau. They also provide a list of the criteria they are looking for in potential customers. The bureau checks their database and lets the credit card issuer know which of the names on the list meet the criteria.

In other words, credit card issuers compiling pre-screened lists have very limited information about you. They have simply been told by the credit bureau that you meet the credit card issuer’s stated minimum requirements (like a minimum credit score).

Can you request a pre-screened offer?

Yes. You need not wait to receive a pre-screened offer to find out if you have a good chance of getting a credit card through. Magnify Money has compiled a helpful list of links to credit card issuers that let you check for pre-approval online.

Is it safe to toss an unopened pre-screened offer in the trash?

No. Shred all pre-screened credit card offers before discarding them.

Theoretically, someone could dig through your garbage, find the credit card offer, and apply for it themselves – opening the account in your name but using a different address to try and keep you from finding out about it. They get the card, max it out, don’t pay for it, and you’re the one left with the debt and the tanked credit score. (Find out how a credit freeze would prevent this.)

If you use a credit monitoring service, you should be alerted when a new account is opened. But even then, you’ll have to deal with headache of resolving it. And if you don’t use a credit monitoring service, you may not be made aware of the fraudulent activity until the next time you check your credit reports or apply for credit and get rejected because of the damage that the fraudulent account has done to your credit score.

Granted, you ultimately won’t be held liable for the debt and it will be removed from your credit reports. But it’s a frustrating process that can take a lot of time and energy to get sorted out.

What if you don’t want to receive pre-screened credit card offers?

You can make them stop – for 5 years or forever – through the opt-out process:

  • You can opt out for 5 years by calling 1-888-567-8688 or going to com.
  • You can start the permanent opt-out process by going to optoutprescreen.com. You will then be instructed to make a written request via regular mail.

This process is managed by the credit bureaus, so you are going straight to the source. Just don’t expect it to be immediate. The FTC says it can take up to 60 days before you stop receiving pre-screened offers. (Note, this will not stop other types of unsolicited offers from showing up in your mailbox. It only stops pre-screened offers made with the help of the credit bureaus.)

If you change your mind, you can always opt back in using the same phone number or website referenced above.

Will opting out of pre-screened offers make it harder to get a credit card?

No. Opting out of pre-screened offers in no way affects your credit or hurt your chances of being approved for a credit card. All it does is stop the unsolicited offers from showing up in your mailbox. You can still use credit card comparison sites to find cards (with the best terms) that your credit is likely to qualify you for.

Are you in the market for a new credit card?

Before you start shopping around, make sure you know:

  • Your credit score
  • The type of card best suited to you
  • The fees to avoid
  • What to expect from the credit check
  • How to use your card to build better credit

Get the facts in Breaking Down Credit Card Basics: What You Don’t Know May Surprise You.

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