Credit Sesame discusses how credit card pre-approval preparation may improve your odds of a successful credit card application.
Have you received a marketing promotion via snail mail, email, or phone call for a credit card? Chances are this is a credit card pre-approval offer, which means you’ve been prescreened for a specific credit card that you can apply for. Being pre-approved means you are likely to be approved, receive the card, and benefit from limited-time offers and rewards for signing up.
But if you haven’t received a pre-approved card offer, you can increase your odds of getting one by taking the right steps. Find out how to make yourself a more viable candidate to get a credit card pre-approval offer by reading this article.
Credit card pre-approval explained
You can try applying for any credit card you like. You are more likely to be successful if you have been pre-approved.
Credit card pre-approval usually refers to unsolicited credit card marketing promotions and offers you get by phone, email, or snail mail. These deals typically come from a credit card issuer, lender, or bank you already partner with, or from one of their affiliated partners.
What pre-approval really means is that you’ve been screened ahead of time and are likely a good candidate to ultimately be approved for that card. Being pre-approved indicates that your credit rating and payment history have been reviewed by the credit card company. In other words, they didn’t notice any red flags that would initially disqualify you from being worthy of having their card.
If you receive a credit card offer for which you’ve already automatically been “pre-approved,” the credit card issuer has already initially vetted you and determined you are a good candidate for the card. Lenders prescreen consumers by requesting a soft inquiry to check credit and determine who qualifies. It does not mean that you have actually been approved for a credit card though.
Credit card pre-approval benefits
“One of the benefits of getting pre-approved for a credit card is that there is no risk to your credit score. Before a credit company send you a pre-approval offer, they send out a soft inquiry to your current lender to access your credit profile,” says Lynne Martin, a real estate professional and investment advisor in Denver. “Unlike hard inquiries to your credit, this does not affect your credit score.”
Note that if you move forward with the application for a pre-approved card, this requires a hard inquiry and may have a small impact on your credit score.
However, an advantage of a successful application after receiving a pre-approved credit card offer is that it can help rebuild your credit profile if you have poor credit.
“Some credit card companies provide credit card pre-approval offers even to those with poor credit scores. These offers usually promise lower interest rates, which can help you pay off previous credit payments and rebuild your credit,” adds Martin.
Also, pre-approved credit card promotions often come with special offers and perks. These can include a zero-interest introductory period (during which you will be charged 0% APR), free balance transfers (enabling you to transfer the balance of a higher-interest credit card, saving you money otherwise spent on interest), and incentives like free airline miles or cashback perks.
What’s required to get pre-approved for a credit card
According to Carter Seuthe, CEO of Credit Summit, to qualify for a pre-approved credit card, you typically must already have at least one line of credit established – either a student loan, automobile loan, or another credit card, for example. This demonstrates to the credit card issuer that you’ve at least established a credit history.
“You must also have no bankruptcies attached to your name, as this will ruin your chances of getting pre-approved. And credit card companies have various credit score minimums they look for when screening an individual’s credit history – most likely a score of at least 600 or 620,” Seuthe explains.
Furthermore, you usually need a low debt-to-income (DTI) ratio. This is calculated by dividing all of your monthly debt payments by your gross monthly income. According to the Consumer Financial Protection Bureau, a DTI of 46% or less is preferred by many credit card issuers.
“Also, you must have very few or no derogatory remarks on your credit history, such as missed payments or accounts in collections,” says Dennis Shirshikov, a strategist at Awning.com and a professor of economics and finance at City University of New York.
How credit card pre-approval preparation may improve your odds
To up your odds of getting a credit card pre-approval promotion in your mailbox, inbox, or by phone, follow best practices.
First, visit Optoutprescreen.com and opt in (agree) to allow credit card issuers to send you credit card pre-approval offers. After doing so, you should receive prescreened credit offers with a higher chance of being approved after formally applying.
“Try to have at least one credit card already in place with a big holder company. Larger companies already have your information and will be more likely to pre-approve you for many different opportunities,” suggests Seuthe.
Additionally, “check your three free credit reports, review what you see there, and dispute any accounts or remarks you don’t recognize or are in error to improve your chances of getting pre-approved,” Shirshikov advises.
Other recommended steps that can make you a more viable prospect for pre-approved credit card offers include:
- Improve your credit utilization. This means paying down your existing credit card balances and other debts. Only paying the minimum amount owed and carrying a balance from month to month can hurt your chances of being offered future credit.
- Pay your bills punctually. Late payments on credit cards and other accounts will significantly hamper your credit score and make you appear less creditworthy.
- Be smart about closing or opening credit card accounts. Don’t apply for new credit accounts too often or too close together, and avoid closing existing credit accounts. Also, avoid the trap of opening too many credit cards.
- Ask for an increase in your available credit from your existing credit card company.
- Aim for credit variety. In other words, it’s best to have different types of credit accounts, including credit cards as well as loans and lines of credit versus only credit cards.
Lastly, if you don’t want to wait to receive a pre-approved credit card offer, be proactive by visiting a particular credit card company’s website and searching for its pre-approval page/section. There, you will likely find promotions and offers available as well as the ability to answer screening questions that can get you pre-approved quickly.
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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.