What Is a Pre-approved Credit Card, Really?

To obtain a list of prospective customers a credit card issuing company may send a minimum set of standards to the credit bureaus which then scans its database and provides a list of people who satisfy the mentioned standards. The company may also send a list of consumers obtained from elsewhere (e.g. from a frequent flyer list from an airline) and have them sent to bureau for evaluation. The issuing company then sends pre -approved credit card offers to all the people on the list provided by the bureau.

When you receive a pre-approved credit card offer, it is not necessary that you would definitely receive the card. When you complete the application and return it, a credit check is again carried out. This is to determine if anything in the credit file has changed for the worse since the original evaluation, and the qualification criteria may be higher this time. This credit check is used for final approval or rejection of the application. Sometimes small changes in total available credit or balance-to-limit ratio since the pre-screening can result in a rejection.

Before considering an offer for a pre-approved credit card, find out the details first. You need to know what interest rate you will be paying and for how long. Some credit cards offer low rates that are raised after a certain period of time or only apply to balances transferred from other cards. You also need to know about any annual fees, late charges or other fees, and whether there are grace periods for payment before interest is applied. If the terms of the offer aren't provided or aren't clear, look for a credit card from someone else.

If getting a lot of pre approved card offers in your mailbox or email annoys you, consider removing your name from the marketing list of the three credit bureaus (Equifax, Experian , or Trans Union) . You could call 1-888-567-8688 to reduce your pre-approved credit card applications. This number will remove your name from all three databases.

As a precautionary measure make sure to tear up those pre-approved credit card offers that appear in the mail. Someone else could accept the offer on your behalf, indicate a new address, and you could have a nice time paying someone else's bills!