What Is a Pre-Approved Credit Card?

If you have a mailing address, you’ve probably received endless offers from various banks, financial institutions and credit card companies for pre-approved credit cards or pre-qualified credit cards. But, other than fodder for the recycling bin, just what are pre-approved credit card offers? And what does being pre-approved for a credit card mean?

Just What Is a Pre-Approved Credit Card?

A pre-approved credit card is really just an offer—called a pre-approved credit card or being pre-approved. When you get a pre-approved credit card offer, it comes from a bank or credit card issuer—also known as a credit card company. Those issuers have pre-screened you for eligibility for the card. That screen has determined you’re a good candidate for the card.

It also likely means you have a good to excellent credit score and not poor or bad credit. Probably not even fair credit. Because of the credit level requirement, pre-approved offers are for traditional unsecured credit cards and not secured credit cards too.

Why good to excellent credit? Because issuers want to know that people they give a card to are likely to pay their bills on time. A higher credit score tells issuers you are a lower risk for paying late or not paying at all. In other words, you’re the kind of customer they want to do business with—they’ll make money on you and not lose it.

The pre-approval process issuers use to determine your worthiness for a card is something like this:

The issuer sends some criteria to one or more credit bureaus, such as Innovis or Equifax, and asks for people that match that criteria.
The credit reporting agencies run a soft credit inquiry on peoples’ files to find matches to the issuer’s criteria.
The issuer receives the results and sends pre-approved offers out.

This process is one where credit card issuers are pursuing your business. The offers are often “private offers.” That means they may be different—actually better—than the issuer’s normally advertised offers. That’s because the issuer wants your business.

Your pre-approved offer may offer you betters terms and conditions. It may also offer better rewards or a sign-up bonus if the offer is for a rewards credit card. It may offer a lower annual percentage rate (APR) on purchases and/or balance transfers, which is the interest rate you pay for balances carried over from month to month. Or it may offer a lower intro APR or lower or no annual fee than the card as advertised to the general public.

Is Pre-Qualified Credit Card the Same as a Pre-Approved Credit Card?

The terms pre-approved and pre-qualified are often used interchangeably. The distinction lies in the detail of who makes the initial approach for application.

When an issuer makes the first move and sends you an offer, it’s pre-approval.

Pre-qualification occurs when you make the first move. You go to an issuer’s website and fill out a form to determine whether or not you meet the issuer’s standards. For example, on this pre-qualification form for Capital One.

Note that asking for pre-qualification or getting a pre-approved offer isn’t the same as applying for the card. The issuer won’t do a hard inquiry—which looks at your individual credit history—on your credit to pre-approve or pre-qualify you. It will only do a soft inquiry. It not instant approval and doesn’t mean that when you do actually apply you’re guaranteed to get the card.

If you’ve been pre-approved for a card, you can still be denied an account, but the chance is lower than when you apply for cards at random.

Does Pre-Approval Hurt My Credit Score?

Pre-approval and pre-qualification don’t affect your credit in any way. That soft credit check has no impact on your credit score.

When you actually apply for a card though, the issuer will do a hard inquiry on our credit file. Each hard inquiry can lower your score 5 to 10 points. That makes it important to be selective about the cards you apply for and to not apply for a lot of them. Pick one you want and that you’re likely to qualify for—whether pre-approved or not—and apply only for that one card.

Once you have a card you’re happy with, you can opt to stop getting pre-approved card offers at OptOutPrescreen.com.

It’s also a good idea to keep an eye on your credit score before and after you apply. You can do that here on Credit.com with a free credit score and a free credit report card that are updated every 14 days.

Pre-Approval Is an Offer, Not a Promise

If you pursue a pre-approved credit card offer, remember it’s precisely that—an offer. After you apply, you may find that some of the details outlined in the initial offer change. For example, if you have poorer credit than the lender thought, it may change the terms or offer you:

A higher APR
A lower overall spending limit—known as your credit limit
A different card for people with lower credit
No card at all

On the flip side, if your credit score is higher than the issuer though, you might get a better interest rate and/or higher credit limit.

The pre-approved card offers you receive are enticing, but remember, your actual terms will depend on your creditworthiness. It’s up to you to understand those terms. If you don’t like the terms you’re offered, look for a lower APR rate once the inquiry on your credit report comes off.

Find Credit Cards and Your Credit Score

If you’re new to credit cards or looking for your perfect next card and aren’t sure which pre-approved offer to apply for or where to ask for pre-qualification, you can search for cards on Credit.com. You can search by category, rewards, credit level and more.

Not sure what your credit level it? Sign up for your free credit score and find out. When you sign up and log in, you’ll see card cards matched to your credit level.