Does accepting a pre approved credit card affect credit score

It feels pretty flattering when your bank notifies you and lets you know that you’ve been pre-approved for some form of credit. It’s a sign that lenders are viewing you as a low-risk client. Stay on the path you’re on, and you’ll continue to unlock better interest rates and more borrowing opportunities. In the meantime though, what are the pros and cons of accepting pre-approved credit?

If you’re someone who’s been struggling to improve your credit score, and this pre-approval is your first indication of success, it can be very enticing to jump at the first opportunity to borrow. Before you make any decisions, let’s take a look at the pros and cons of accepting pre-approved credit.

What To Consider:

Pro: You can use this new credit, whether it’s a line of credit, a loan or a credit card, to build your credit score even more.

Con: Having more credit at your disposal could lead to accidental spending abuse, and lead you to become buried under a mountain of debt again.

Pro: Having more credit available can provide greater freedom. For instance, a credit card offers you the ability to book travel easier.

Con: You could get stuck with a high-interest rate.

Pro: The potential to earn rewards - many credit cards offer some form of rewards that you can earn through spending.

Con: If you accept a loan you will be locked into long-term monthly payments, which can affect your budget and spending lifestyle.

Pro: Accepting more credit will lower your usage percentage. For example, if you’re using 50% of your $10,000 available credit, and then the bank offers you another $5,000, your usage percentage drops to 33% of $15,000.

Con: Adding another minimum payment each month is going to lower your monthly cash flow.

Pro: Accepting new credit and adding another trade line to your credit report can help build your credit score.

As you can see, there are upsides and downsides when it comes to accepting an offer of pre-approved credit. Before making any final decisions, ask your self the following three questions:

1. What is the interest rate?
2. Are your spending habits under control?
3. Can you afford to add another monthly payment to your budget

Have you ever been pre-approved for new credit? Did you decide to take it? Let us know in the comments!

Have you ever received a pre-approval offer in the mail? Or maybe you've received a pre-approval offer via email? Then you may have asked yourself, “What does pre-approved mean for a credit card?” Let's find out.

What's a pre-approved credit card offer?

When you've been pre-approved for a credit card offer, this means that you've been prescreened based on specific criteria, including your credit and payment history. Lenders prescreen consumers by requesting a soft inquiry to check credit and determine who qualifies.

Based on these factors, you may be pre-approved for an offer. You might receive these offers from card issuers that you already have an account with, or from affiliated partners who are looking for ways to promote their credit card offerings. Pre-approval offers can be delivered by physical mail or email, or provided verbally through a phone call.

A pre-approval offer suggests you've passed the first step in the screening process. But remember — you can't actually be approved for the card unless you apply. You may seem like a promising candidate, but the lender will likely want more information to process your application.

Pre-approved vs. pre-qualified credit card offers

Pre-qualification and pre-approval processes are different ways for you to review your credit card options.

Pre-approved

If you've received a pre-approval offer, the credit card issuer has reached out to you first because you meet the basic requirements. Pre-approved credit card offers differ because lenders already have the information needed to assess your credit worthiness.

Pre-qualified

Pre-qualification for a card indicates that you've made the first request and reached out to the credit card company to see if you might be approved for the card you're interested in. The credit card issuer may then look at your financial profile and show you credit cards and offers that you might qualify for if you apply. It's not a guarantee, but it's a good sign.

How to get pre-approved for a credit card

In short, the card issuer needs to pre-approve you for a credit card, and then you can take action. Some people receive a pre-approved credit card offer in the mail, whereas others may need to complete an online form to provide the credit card issuer with basic information. Ways to apply for a pre-approval offer include:

Respond to an offer from a credit card issuer

One way to possibly get pre-approved for a credit card is by applying for an offer that the credit card issuer has sent you by mail, email or phone, also known as “prescreened offers.” Although mail may not be as popular as it once was, pre-approved offers may appear in the pile. Offers may include an invitation code that you can enter when you apply.

Request a pre-qualification on the credit card issuer's website

Most major credit card issuers that offer pre-approval have online links to a simple form where you can apply that can be found on the issuer's site. These forms will often ask you to provide basic personal and financial information. Once the information is entered, you may be shown a credit card offer that the issuer feels best fits your financial needs. Your offer may be more personalized since you provide information about yourself. In this situation, you'll need to get pre-qualified first to get pre-approved. Once you're pre-qualified, you may receive a pre-approval offer.

Does a pre-approved credit card affect your credit score?

Pre-approved offers, alone, typically don't impact your credit score because the card issuers perform a soft inquiry instead of a hard inquiry before providing an offer of pre-approval. However, if you follow through and apply for a pre-approved offer, the issuer may request a hard inquiry, which would then be indicated on your report and may impact your credit score.

In summary

So, if you've been asking yourself, “what does pre-approved mean for a credit card?” know that you're not the only one. And while pre-approval offers don't guarantee approval, they can indicate that you have a higher chance of being approved once you finally apply for that card.

Is it good to accept a pre

What are some dangers of opening a pre