When a borrower applies for a new credit card, a hard credit pull is usually conducted to define the borrower’s creditworthiness. Such inquiries may hurt your credit rating so consumers aim to avoid them.
Getting preapproved or pre-qualified for a credit card is a suitable solution that lets you avoid this tedious screening process and check if you can qualify for a certain card. Keep on reading to learn what credit card issuers offer such options.
Why You May Need Pre-Qualification or Preapproval
Every consumer has a different credit rating. Some applicants have a stellar score while others struggle trying to improve it. While emergency loans for bad credit holders offer a suitable way of getting additional cash for their needs, receiving a new credit card may offer reasonable rates and terms. On the other hand, applying for a credit card may come with certain concerns.
Borrowers are concerned if their application will be approved, what rates and APR they will get, and whether their credit limit will be suitable for them. While they can’t predict the answers to these questions, a hard credit inquiry is generally performed on their credit report. It is conducted in order to identify the client’s creditworthiness but this screening process can harm your credit especially if it’s already less-than-perfect.
What can you do in this case? You should try pre-qualification or preapproval. It will not just allow you to avoid hard credit pulls on each application but also see if you qualify for certain cards and even get the credit limit and APR you are eligible for.
Of course, hard inquiries will still be conducted when you formally apply for a particular card but you will already understand your options. Comparing several offers is always better until you choose a specific crediting tool.
Pre-Qualification or Pre-Approval: What Is the Difference?
The terms pre-qualification and pre-approval may often be used interchangeably by credit card issuers. Both terms mean the provider preliminarily checks the financial and personal data of the application to define if they qualify for a certain offer. Yet, there can be some difference.
- Credit card preapproval means a crediting company performs a credit inquiry and approves your request. In other words, the applicant will most likely be approved for a credit card if they formally submit an application and get preapproved. Financial data such as monthly bill payments and annual income can also be analyzed.
- Credit card pre-qualification means a creditor conducts an initial inquiry of financial data and credit history of the borrower and determines if they have any chances of approval if they formally apply for a credit card.
How to Get Preapproval or Pre-Qualification for a Credit Card
If you want to get pre-approved or pre-qualified for a new credit card, you should start by filling in the necessary details on the issuer’s website. Every service provider might demand certain data, both personal and monetary.
Make sure your basic information including annual income, Social Security number, housing status, and monthly bill payments are handy. Pre-approval is conducted on the web in an instant. You may notice what credit card offers are available to you on the website of the issuer. These offers may even include APR, credit limit, and interest rates.
The numbers of credit cards in the USA was gradually reducing a year before the global pandemic. There were over three times more credit cards in the USA in 2019 than debit cards. Visa became the biggest credit card brand across the country in 2019, with over 300 million cards issued.
Besides, a preapproval offer for a credit card may be mailed to the borrower and responded to by entering their offer number on the company web page or by phone. You will find the details on how to apply for a new card in the mailing letter. Applicants who are denied will be given reasons.
Although it may be annoying to get rejected, you should utilize this information and the reason for denial to boost your credit score. You will be able to apply again several months later when your rating is back in good standing.
Watch Out for Scams
Sometimes, false claims of pre-approval made by unreliable crediting companies cost borrowers time and make them subject to unnecessary credit inquiries. The Federal Trade Commission has recently taken action against Credit Karma for tricking American consumers with allegedly false “pre-approved” credit offers as almost one-third of such offers result in denials.
The company has to pay $3 million that will be given to consumers who wasted time applying for credit cards they ultimately didn’t qualify for and to stop making such deceptive claims.
Credit Cards That Offer Pre-Qualification or Preapproval
These options can be offered by various credit card issuers and service providers across the country. The information which is required to mention differs among issuers. Here are several options for you to consider:
Capital One. It demands the borrower’s full name, Social Security number, date of birth, as well as the type of card they need.
Discover. It asks for the client’s full name, annual income, Social Security number, housing status, as well as monthly bill payments. As you can see, more data is needed to provide if you choose this issuer.
American Express. It demands the last four digits of the client’s Social Security number, annual income, and home address.
Bank of America. It needs your date of birth, full name, last four digits of your Social Security number, and the type of card you require.
Chase. You can’t get preapproved for a new card on the web now. You may log into your account and get an offer based on your relationship with Chase.
The Bottom Line
One of the easiest ways to understand which credit cards you can be eligible for is to apply for preapproval on the website of the service provider. If you choose pre-qualification or preapproval, you will be able to compare several options and shop around among service providers without hurting your rating.
It is important for those whose credit score isn’t in good standing at the moment but who still need to get a new credit card. Take into account that such offers don’t guarantee your formal application will be approved with the same rates and credit limit.
