If you’re like most Americans (18 years or older), you’ve probably been inundated with pre-approved credit card offers filling your mailbox. With “You’ve Been Pre-Approved!” stamped all over the envelope, it’s easy to assume that you’ve already been approved for one of these offers – BUT THIS IS NOT THE CASE! Please be aware that pre-approved credit cards are nothing more than a deceptive marketing gimmick. The truth is, you’re either approved – or you’re not. There is no such thing as a ‘pre-approval’ in the credit card industry.
If the term ‘pre-approval’ meant you were actually approved for a credit card, it would be called just that – a credit card approval. If you haven’t filled out an application or provided any personal information, you’re just like every other applicant hoping to qualify for a new line of credit. The term ‘pre-approval’ is just a fancy way to entice you to submit an application.
How the Pre-Approval Process Works
Credit card issuers purchase mailing lists from marketing companies and the three major credit bureaus to find new customers. In most cases, pre-approvals are not based on credit scores or any financial data, but on demographics provided by these firms. For example, if readers of a particular magazine are thought to have high incomes (ie: Fortune magazine), a credit card issuer will purchase that list of customers assuming that they’ll meet their guidelines for a high-limit, platinum offer. In reality, the decision isn’t made until an applicant submits an application and their financial situation is thoroughly evaluated – the same process that occurs when you apply for any credit card.
Although this strategy is sure to provide the issuer with qualified applicants, the same mailing list is likely to include students, unemployed workers, non-citizens or even people that have passed away. In most cases, these people (if alive) will not qualify for the offer being marketed.
What It Means to You
Although it seems like a good sign that you’re receiving pre-approved credit card offers by mail, the truth is, THEY MEAN ABSOLUTELY NOTHING. Most ‘pre-approvals’ are not based upon your credit score or any financial data and there’s no guarantee that you’ll actually be approved. Even if your credit score is taken into consideration, other factors (such as your income), play an important role in the approval process. Applying for a pre-approved credit card is just like applying for any credit card offer. You need to submit an application, your credit report will be pulled, and a complete evaluation of your financial background will take place before any decision is made.
Compare for Yourself!
Rather than taking the credit card companies’ suggestions, shop around and compare offers for yourself. Before you apply for a pre-approved credit card you receive in the mail, be sure that it’s the best available offer by using comparison sites like WOWCreditCards.com. Compare offers from a variety of issuers and evaluate introductory APRs, interest rates, reward incentives and fees.
Not Interested? Opt-Out
If you’re not interested in receiving pre-approved credit card offers by mail, you can opt out and limit the amount of junk mail filling your mailbox. Call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit www.optoutprescreen.com for details. Be prepared to supply your personal information including SSN and DOB. Opting out will not stop standard, non-screened offers and removing your name from these lists will have no effect on your ability to apply for or obtain credit.
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