Pre approved credit cards

Pre approved credit cards

Every week in our mailboxes we receive pre approved credit cards. The question most people ask is “what are a pre approved credit cards and am I already approved?”
The simple answer is “NO.”

All pre approved credit cards are just teaser offers. The credit card companies send out these offers to see who will send in an application. The credit card companies do what is called a “soft hit.” A soft hit is a general look at your credit report. The important thing you need to know is a “soft hit” does not hurt your credit score.

Do Not Apply for All Credit Cards
When you send in the application for the pre approved credit cards offer is when an actual hard hit is done on your pre approved credit cardscredit report. A hard hit is when you applying for a credit card or loan. A hard hit will lower credit score if you do too many in a short period of time.
In other words, if you respond to three pre approved credit cards offers and all three approve or decline you it will lower your overall credit score.

Just An Offer, Not An Approval
Pre approved credit cards are just an offer to apply for a credit card. People believe all these offers are actually approved credit cards.
The other part of the offer is the credit limit. Many times you will receive an offer for a $5,000 pre approved credit cards at 0%. Now you may receive an approval, but at a lower limit of say $1,000 and rate of 9.99% vs. 0%. The reason is after they reviewed your credit report they determined you did not qualify for the lowest rate.

You need to look at the pre-approved credit cards the same as car ads on TV when you see an offer for a brand new car with a payment of $199 a month. The car ads always say with APPROVED CREDIT really quietly as the ads ends. The credit card companies are just like the car companies want you to get you in the door and apply for credit. Read the fine print of any application.

Couple of tips on whether you should apply for a pre approved credit cards.
1. Do you actually need another credit card?
Just because the offer sounds good does not mean you should apply for any old credit card. Remember every time you apply for a credit card or loan you are lowering your credit score. Your credit score is what dictates the rate will you receive on credit cards and home loans.
The more credit applications the lower your credit score.

2. Do you have bad credit?
If you know you have bad credit and keep applying for more pre approved credit cards, which result in being declined you are lowering your credit score. The best advice is to get current on your present bills. Once you are current you can then see if a new credit card company will approve a credit card.

Applying for credit card after credit card does not make sense if you are declined for the same reason such as late payments. The credit card companies are telling you something if you are declined for a specific reason. The solution is to address the reason and once the reason is fixed then apply for pre approved credit cards.

The lesson is not to believe receiving pre approved credit cards is an approval for a credit card. This is just one way credit card companies find new customers. Everyone is not approved who receive pre approved credit card offers.

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