Does Credit Card Pre-qualification Affect Your Credit Score?

credit card pre-qualification

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Credit Sesame discusses whether credit card pre-qualification affects credit score.

Credit card pre-qualification (or pre-approval) can be helpful. Credit bureau Experian reckons, “You’re more likely to be approved for a credit card for which you’re already pre-approved.”

Pre-approval means you’ve met the basic qualifications that a card’s issuer lays down for a particular piece of plastic. But that doesn’t mean you’ll definitely be approved if you apply. More checks will be made, and all you’ve done is clear the first hurdle.

But should you be worried about the pre-approval process harming your credit score? The short answer is a definite No! Read on to discover why that’s the case.

Credit card pre-qualification or pre-approval?

Some card issuers differentiate between pre-qualification and pre-approval. Others don’t. Meanwhile, some (perhaps most) think pre-approval is the more accurate and valuable of the two. Others take the opposite view.

Capital One is a card company that thinks pre-approval is the more rigorous. It thinks you might get pre-qualified for a card based only on your credit score. But that an issuer might want to know more about you to pre-approve you. For example, it might check your record for paying credit card bills on time — as well as take a look at your score.

That’s just one opinion. Unless a card issuer makes clear what it means by the terms, you can use the words interchangeably, as we have in this article.

Pre-qualification and your credit score

Credit card pre-qualification or pre-approval shouldn’t affect your score at all. That’s because they require only a “soft” credit inquiry.

VantageScore is one of the Big Two companies building credit scoring technologies. And it explains the difference between hard inquiries and soft ones.

Soft inquiries

VantageScore says, “Soft inquiries do not impact your credit score.” It provides three examples of what those are:

  1. Requests you yourself make to see your score, often through free credit score websites like Credit Sesame
  2. When your existing lenders want to check your score to manage your account better
  3. Scores used by lenders to make loan offers to you. In other words, pre-approval and pre-qualification inquiries

Just to reassure you, it’s not only VantageScore that follows this line. FICO, the other big player in credit scoring, agrees. So you can be sure soft inquiries won’t affect your score.

Hard inquiries

Hard inquiries, on the other hand, do affect your credit score. VantageScore explains why:

Any time you take on additional debt, you are statistically at greater risk of inability to pay your bills. Shopping for and opening new credit accounts, therefore, are indicators of the sort of risk credit scoring models are designed to detect. All other things being equal, someone who has had a number of inquiries on their credit reports is going to be riskier than someone who does not.

So hard inquiries arise when you actively apply for new credit. But don’t panic. Typically, the hit is only a few points. And, providing you continue to make on-time payments and keep your card balances low, your score can bounce back within a few months.

VantageScore makes that point strongly: “[Hard] inquiries are among the factors which have the least influence on your credit scores.”

But what if you’re planning to apply for a large new loan (a mortgage, say, or car loan) within those few months when your score’s lower? You won’t want to risk that lower score affecting the interest rate you’re offered. So, hold off on applying for new credit in the months before you go for some big new borrowing.

A hard inquiry when you apply for your new card

OK, we know a credit card pre-qualification doesn’t affect your score. But, if you decide to move forward and apply for the plastic, you’ll be triggering a hard inquiry. And that will produce a small knock to your score.

So what’s the point of credit card pre-qualification or approval? Well, as VantageScore said, you’re boosting your chances of getting approved. And you won’t be shooting in the dark by making random applications for cards that you can’t get. Your score is hit by each application whether or not your lender approves it.

Rate-shopping rules don’t apply to plastic

You may have read that there are special score rules that allow you to apply to several lenders for new credit so you can shop for your best rate. And that’s true — sometimes.

Both FICO and VantageScore allow you to apply to as many lenders as you like for similar loans within a “focused” period. Fourteen days is safe. And your score will take the same minor hit for a single hard inquiry if you apply to 10 lenders as if you apply to one. That’s great.

But it doesn’t apply to credit cards! You can only shop for rates when you’re applying for big loans. VantageScore gives examples of mortgages, auto loans and student loans.

Credit card pre-qualification can affect your credit score in a good way

We started out by saying that credit card pre-qualification can’t harm your score. And that’s true. But it may be able to help it.

Get in the habit of applying only for cards with pre-qualification. You may think, “There’s no harm in applying.” But  there is harm, if you are turned down. Your credit score will drop a few points. If you pre-qualify your application is more likely to be approved and you can avoid that

So, while it is not strictly true to say that credit card pre-qualification helps your credit score, pre-qualification is less likely to harm your credit score than applying without knowing if you have any chance of approval.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

Peter Warden
Peter Warden has been writing for 14 years about personal finance, credit cards, mortgages and insurance. His work has appeared across a wide range of media, and he is an editor at The Mortgage Reports. He lives in a small town with his partner of 30 years.

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