Even With Credit Card Pre-Approval, You Can Still Be Denied

Responding to a pre-approved credit card offer doesn’t mean you’ll necessarily actually get the credit card once you apply. Before you get your hopes up about a great credit card offer, know that you’ll still have to go through the regular qualification process and you could be denied the credit card or approved for one with less attractive terms. The wording is tricky and you’d have to read the fine print on the credit card offer to know this, but credit card pre-approval isn’t guaranteed.

How Pre-Approval Offers Work

Credit card issuers pay lots of money to mail credit card offers and to process applications. It would be unwise for credit card issuers to send offers to every consumer because a significant number wouldn’t qualify. Instead, card issuers narrow down the list so the consumers who do receive the offers are more likely to qualify for the card they’re offered.

One of the ways credit card issuers get this list is through one of the credit bureaus. Since credit bureaus have credit information on nearly every consumer who’s ever had some type of credit account, they’re a great resource for credit card issuers seeking a new customer base.

As part of a particular credit card’s marketing campaign, a card issuer might ask the credit bureau to send a list of consumers who meet certain criteria, say everyone who has a credit score over 720 and at least one major credit card account in good standing. Or, the card issuer may give the credit bureau a list of consumers and ask the bureau to narrow the list based on certain criteria. Then, the credit card issuer sends out a “pre-approved” credit card offer to everyone on that list. Banks can also use their own customer database to find candidates for pre-approved credit card offers.

Once you receive the offer and apply for apply for a pre-approved credit card, the credit card issuer probes deeper into your credit history and other qualification factors to decide whether to approve your application. If you meet the qualifications, then you’ll be approved. However, you could be denied if there’s negative information on your credit report or you don’t meet another criteria, like a minimum income for example.

It’s also possible to be denied for the specific credit card offer you responded to, but approved for a different one. For example, you may get an offer for an 18-month 0% introductory rate, but instead qualify for a 9-month 0% introductory rate.

Pre-Approved Offers and Your Credit Score

When credit card issuers pull your credit report for promotional purposes, they do a “soft” credit inquiry, the type that doesn’t affect your credit score. In fact, those soft credit inquiries only appear on your version of your credit report, not the one other lenders see when checking your credit. If you respond to a pre-approved offer, the credit card issuer will do a “hard” credit inquiry and that kind does show up on your credit report. Too many hard inquiries can adversely affect your credit score, regardless of whether your applications are ultimately approved.

Explanation of a Pre-Approved Offer Denial

Credit card issuers are required to tell you why you were denied for a credit card and automatically give you a free credit score whenever your credit score was a factor in the decision. You’re also entitled a free copy of your credit report when your credit history was the reason for the denial. You’re responsible for requesting this free credit report within 60 days of being denied. These free credit score and credit report disclosure rules apply whenever you make a credit-based application and you’re turned down because of your credit history.

Stop Pre-Approved Offers

You have the right to remove your name from prescreened offer lists – at least the ones provided by the credit bureau. Visit www.optoutprescreen.com or call 1-888-5-OPT-OUT to opt out for five years or to opt in again if you’re ready to start receiving credit card offers again. The opt out website also has a form that you can complete and mail to opt out permanently.

Opting out won’t stop all pre-approved offers. You may still get offers from companies you already do business with or businesses that get your name from a source other than the credit bureau.

Sources: Federal Trade Commission, Opt Out Services LLC