Credit card pre-approval makes signing up for your first credit card a lot easier.
The credit card marketplace is crowded, and every issuer is advertising to get your attention. But they may not tell you (or only tell you in the fine print) which cards you’re actually likely to get approved for, or which will score you the best interest rates.
A little research into good credit cards can help you cut through the noise, and the pre-approval process helps you narrow down which cards are the best fit for your (cloth or virtual) wallet. It’s a low-risk opportunity to pick the credit card with the features you want — and to make sure you qualify.
What is pre-approval?
Credit card companies are always on the lookout for new customers. One way they find potential cardholders is by pre-screening credit reports from the major credit bureaus.
They identify consumers whose credit scores and reports are in the ballpark of what the company looks for — like no bankruptcies, no delinquencies for several months, and a score below the company’s minimum cutoff.
Then they’ll send a pre-approval card offer to these consumers.
It’s important to remember that pre-approval doesn’t mean you’re automatically qualified for the card. But it does mean you’ve made the “first cut” by fitting the credit card issuer’s most basic requirements.
What’s the difference between pre-qualification and pre-approval?
Some issuers use the term “pre-qualified” instead of “pre-approved.” Though these terms are sometimes used interchangeably, they describe different types of offers based on who initiates the process.
Pre-qualification for a card means the customer (you) makes the first request.
If you’re interested in a specific card, you can go to the company’s website and fill out some basic info. The company responds by showing you the cards and offers you might qualify for if you made a formal application. At that point, you’re “pre-qualified” and can decide whether or not to apply.
Or a lender may invite you to find out if you pre-qualify for their card (through an advertisement, for instance). This isn’t pre-approval, since the lender hasn’t screened your credit yet to see if you’ve made the first cut.
Pre-qualification may be the route to take if you’re brand new to credit — without a credit score, you’re probably not getting on pre-approval mailing lists.
Pre-approval means the credit card company reaches out to you first because you meet their basic requirements. Once they’ve scanned consumers’ credit scores, they let certain consumers know they’ve been “pre-approved.”
Lenders often tap into their existing customer base to find people to pre-approve, as well. If your current bank is rolling out a new credit card, for example, they might send you a pre-approval offer.
Which is better, pre-approval or pre-qualification?
Neither of these processes is better than the other, or more likely to get you final approval. They’re just different ways to review your credit card options.
For both pre-approval and pre-qualification, you’ll go through a soft credit check — a check that doesn’t impact your credit score. This means both processes are relatively risk-free.
The hard credit check, the one that knocks a few points off your score, doesn’t happen until you fill out the longer application for the card.
How do I get pre-approved for a credit card?
Respond to an offer from a credit card company
If you have time to pick a card and don’t have a lender you prefer, you can wait for the credit card company to come to you.
Companies do still send offers by snail mail, though not as much as they once did. So it’s worth taking a look at any mail offers before dropping them in the recycling bin.
Pre-screened offers are different from the general mailings that companies send to everyone on their marketing list. Look for the words “pre-approved,” “pre-qualified,” or “pre-screened.” The offer may include an invitation code you’ll need to apply for the card online.
One advantage to applying for a pre-approval offer is that they’ll sometimes give you an introductory deal associated with the offer, like a sign-up bonus or a few extra months of 0% interest.
These deals aren’t always advertised to the general public, so they’re a nice pre-approval perk.
Request pre-qualification on a credit card company’s website
Inquiring about a pre-qualification offer may be the best way to get credit card pre-approval if:
- You’re new to credit and opening your first credit card.
- You’re rebuilding a low credit score.
- You want to go through a certain bank or apply for a specific card, and you haven’t received an offer.
- You want to check out a wider range of card options.
Most major card issuers that offer pre-qualification have an online link to a simple form. Usually, you won’t enter more than your:
- Date of birth.
- Social security number.
Why is it important to get pre-approved or pre-qualify?
If you’re shopping around and considering lots of different cards, pre-qualification is a risk-free way to compare initial offers before you fill out any applications.
The pre-approval stage allows you to:
- Rule out any cards or issuers that you don’t qualify for, so you don’t waste time applying.
- Figure out the interest rate range you’re likely to get.
- Compare potential sign-on bonuses, loyalty rewards, and other credit card features.
- Double-check the card company’s requirements for cardholders, which are more detailed than their pre-approval requirements.
When you take the next step of a formal application, you’re officially applying for new credit. This means the company is required to run a hard credit check. They’ll ask your permission first.
Hard credit checks do show up on your credit score, usually knocking it down only 10 or 20 points. That’s not a huge deal if it happens once in a while.
But if you apply for credit pretty frequently — more than two or three times in six months — your credit score takes a bigger drop.
With pre-approval, you can make sure you’re only committing to the hard credit check if you’re likely to be approved for new credit.
Picking the right credit card to apply for
As a savvy MoneyUnder30 reader, you probably know this already, but I’ll remind you just in case: pre-approval or pre-qualification doesn’t mean the card is the best fit for your needs and lifestyle.
First, spend some time figuring out what you want in a credit card. I suggest asking yourself questions like:
- Are you likely to use it for big expenses like travel, or everyday costs like groceries?
- Do you want a card where the rewards category matches up with the way you spend?
- Is your main goal to start building credit?
Once you know what’s important to you, you can use the pre-approval process to find cards that are a good match.
This is especially helpful if your credit card pre-approval offer suggests multiple cards from the same company. These cards will all have slightly different terms, so take the time to do your research about their differences.
How do you apply for a credit card after you’re pre-approved?
The pre-approval or pre-qualification process doesn’t require much info.
You’ll usually enter your name, birth date, address, and your social security number (either the last four digits or the whole number) to confirm your identity.
The official application is a lot more thorough. At a minimum, be prepared with:
- Income information. You may or may not need to submit proof of income, depending on the issuer. But you’ll at least have to estimate how much you earn every year.
- Housing payment information. This should include how much you’re paying in rent or mortgage a month.
- Employment status.
- Income details for a co-signer, if someone is co-signing for the card with you.
What credit score do you need?
It depends. There’s no minimum score that applies to all issuers, so if you have any credit at all, it may be possible to pre-qualify for a card. Of course, the better your credit is, the more offers will be available.
If you don’t have a credit history, it’s a little trickier. Some card issuers consider alternative credit data, like income and work history, to determine financial responsibility.
After you get approved
If you make the final cut and get approved, not just pre-approved, it’s time to double-check your card terms.
Credit card companies are required to provide the same terms listed in the initial pre-approval offer if they accept you. This means you should get the same interest rate, fee, or bonus that was stated in the offer. Many pre-approvals show a range of interest rates, so they’re required to give you a rate somewhere within that range.
Read more: The best credit cards – MU30’s top picks
Are you guaranteed approval when pre-approved for a credit card?
Not necessarily. A pre-approval or pre-qualification is an invitation to apply, not a guarantee of acceptance. It means there’s a strong chance you’ll meet the standards for cardholders, but the lender needs to know more before actually extending you credit.
Can you get denied after pre-approval?
Remember, pre-approval is just the first step in the process. You can get denied after submitting a formal application, even if you were pre-qualified or were pre-approved.
According to a 2019 report, only around 40% of credit card applicants made the final cut and got approved for a card.
When you officially apply, you’re giving credit card issuers a lot more information about your financial status than you did in the pre-screening stages. This means they’ll judge you a little more strictly.
Here are some of the most common reasons pre-approved candidates get their applications declined:
- Your monthly or annual income doesn’t meet the issuer’s minimum cutoff.
- Your reported payments are too high relative to your income.
- Your credit data has changed significantly since the pre-approval offer.
- You’ve taken on debt or missed several payments since the pre-approval offer.
- Your income has dropped since the pre-approval offer.
The lender should send you a letter telling you why they made the decision, so it won’t be a mystery.
What if I can’t get pre-approved for a credit card?
If you don’t get any card pre-approvals or pre-qualifications, don’t sweat it. Credit lenders may be looking for cardholders who fit a particular financial profile, and that doesn’t reflect on your general creditworthiness. You still have a number of options.
- Try pre-qualifying with another credit card company. Their terms may be more generous or suited to what you need.
- Apply anyway. This is a risk because the issuer will run a hard credit check. But if you have stable employment, good income stats, or a co-signer with strong credit, these factors may make up for a less-than-perfect credit score.
- Work on improving your credit. Make rent, bill, and loan payments on time. If you’re brand new to credit, you can take out a credit builder loan (as long as you’re able to pay it back on schedule!). Or ask a trusted family member or partner if you can be an authorized user on their account.
Read more: How to build credit the right way
Apply for a secured credit card
For credit newbies, secured credit cards are a nice bridge into the world of credit, and a lot of major card issuers offer them.
You’ll “secure” the card with a deposit — this amount can vary, but think around $200 — which gives you access to a credit line up to that amount. Then you spend just as you would on any other card.
After several months of responsible use, you’ll usually be eligible to transition to an unsecured credit card from the same company.
Read more: Best secured credit cards
Credit card companies that offer pre-approval
Most of the bigger credit card names have pre-approval or pre-qualification forms that are easy and quick to fill out online.
Keep in mind you may not be able to seek pre-approval for every card in the lender’s collection, but they’ll offer a decent range of cards to choose from.
- American Express (good credit is usually required for applicants).
- Bank of America®.
- Chase (accepts applicants who have opened less than five credit cards in the past 24 months).
- Capital One.
- Citibank (requires a pre-approval invitation code).
- Discover (requires more information for the pre-approval form, including income and housing payment estimates).
- Credit One.
Whether you’re getting your first credit card or adding one to your collection, it’s worth going through the pre-approval process first. You’ll save time, preserve your credit, and hopefully end up with a great card that will help you achieve financial stability.
Featured image: Roman Samborskyi/Shutterstock.com