You must have received emails, messages, and phone calls from various banks or credit card companies informing you that you have a pre-approved credit card. If you are wondering what is a pre-approved credit card and how it works, read ahead.
Technically, a pre-approved credit card means that a credit card has been approved for you before you have applied for it. However, banks and credit card companies use this term to invite you to apply for their card.
They might have done a soft inquiry on you or your spending habits and zeroed in on you as a potential customer. Once you respond to such an invitation, the institution will run a regular and thorough search on your credit history and credit report before approving a credit card for you.
Credit cards are a great way to improve your credit score if managed responsibly. They also come with many benefits and offers, making your life easier and hassle-free.
Here are some facts you must know about pre-approved credit cards -
They are not a separate type of credit card but an invitation from credit card companies and banks to apply for one
You will have to go through the same application and credit history checking processes as you would have to for a regular credit card application
Any offers that might have been communicated to you with the information about the pre-approved credit card will be for a limited period
You must note that when you respond to a message about a pre-approved credit card, it will not be handed to you without any queries. The bank or credit card company will run a thorough scrutiny of your credit history before approving it.
If your credit history is not up to the mark, the application will get rejected. When a pre-approved credit card application gets rejected, your credit score will be negatively impacted.
You must note that applying for a credit card is like applying for a new credit product. Rejections will lower your credit score and hurt your credit report.
As mentioned above, pre-approved credit cards are invitations from banks or credit card companies without any initiation from your end. They run a soft inquiry and send you a message or Email if your credit score is acceptable.
On the other hand, pre-qualified credit cards are offered after you show some interest in a credit card. You might have visited a website and compared cards or an online survey form, showing potential as a customer. This is when credit card companies or banks contact you with pre-qualified offers.
Credit cards are a great way to make cashless payments and earn reward points as well as cashback offers. They have many benefits and give you access to various complimentary services, like airport lounge visits, golf passes, etc.
Pre-approved credit cards are just a marketing technique banks and credit card companies use to invite you to apply for their credit cards. Once you respond to this invitation, your credit history will be checked before your application for a card is approved.
Please note that a credit card is a credit product and applying for it will affect your credit score. But if you keep paying your bills on time and don’t exceed your Credit Utilization Ratio, your score will improve steadily.
Before applying for a credit card, you should check the offers and fees related to it so you can make an informed decision.
No, a pre-approved credit card is not a guarantee that you will get the card. It is just an invitation from banks and credit card companies for you to apply for their card.
Whether a pre-approved credit card is good for you or not depends on your credit history, score, and your financial condition. If it increases your credit utilization ratio and adds to your debt, it is not good for you.
Once you respond to a pre-approved credit card invitation, the bank or credit card company will run a check on your credit history before approving it.
Yes, if the card company sees that your credit score, report, or history is not acceptable, you may be denied. Please note that being denied a pre-approved credit card will negatively impact your credit score.
Pre-approved credit cards might be convenient but they come with a risk of overspending or accumulating debt. One might get enticed to use the credit that is available without thinking too much about it. This might push the person to financial difficulties in the future.
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