Pre-Qualified vs. Pre-Approved Credit Cards: What’s the Difference?
When you are pre-qualified or pre-approved for a credit card you can apply for it with confidence that you have a good chance at being approved. Both terms are used interchangeably when it comes to credit card applications. The main difference lies in who begins the process.
Think of the last credit card application you received. Did you notice the bold text saying you’ve been preapproved? That term is used when companies reach out to you. However, when you are shopping for a new credit card, you can become prequalified by the card issuer before you submit your application.
| Prequalified credit cards | Preapproved credit cards |
|---|---|
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What does getting prequalified for a credit card mean?
One of the main differentiators between prequalified and preapproved is that consumers can initiate the prequalification process whereas lenders initiate the preapproval process.
Think of it like a job search. You supply criteria like career-related keywords, location and salary. Using that info, LinkedIn gives you a list of jobs that might fit your skills and requirements — however, there’s no guarantee that you’ll be hired. Along the same lines, to prequalify for a credit card from an issuer like Chase or Discover, you input some basic information, and the issuer gives you a list of their cards for which you have a good chance of approval.
You can then use this list to apply with a higher level of confidence that you’ll be approved for the credit card than you would for a card that’s not on the list.
You should have the following details on hand to prequalify:
- Personal information, including Social Security number and birthdate
- Income
- Monthly rent or mortgage payment
- Details of your debt
- Bank account
Prequalifying for a credit card doesn’t hurt your credit score since the lender does a soft pull. Since this process is automated and based on complex algorithms, you can generally expect a response within a few minutes.
What does getting preapproved for a credit card mean?
When you’re preapproved for a credit card, the credit card issuer reaches out to you with product recommendations. You can think of this like a job recruiter reaching out to you to fill a specific role at their company. Similar to a credit card preapproval, a job recruiter has done some research on your background and wants to gather more info to make sure you fit the requirements.
Credit card issuers get your information from one of the three credit bureaus based on the credit-related criteria they’re looking for. For a high-end card they might request a list of those with credit scores above 800 and long history of on-time payments. On the other hand, if users are offering a card to help improve credit they might target those with credit scores under 600 or short credit histories.
If you respond to a preapproval offer, the card issuer will do a hard credit pull to verify your current credit report. Then they review it to ensure your creditworthiness and that nothing has changed since they did a soft pull for their preapproval offer. At this point they either approve your application or deny you based on factors they found in your credit report.
Preapproval and prequalification have slightly different meanings when it comes to home loans. Learn more about mortgage prequalification vs. preapproval.
Credit cards that offer prequalification
Some credit cards that may offer prequalification include:
- Chase Freedom Unlimited®
- Citi Simplicity® Card
- Wells Fargo Active Cash® Card
- Discover it® Miles
- Wells Fargo Reflect® Card
- Discover it® Student Cash Back
- The American Express Blue Business Cash™ Card
- AvantCard Credit Card
- Capital One Platinum Credit Card
- OpenSky® Secured Visa® Credit Card
Here’s a list of credit card issuers that offer prequalification, along with the information you must submit.
| Issuer | Preapproval offererd | Required information |
|---|---|---|
| American Express credit card preapproval | Yes | Name, address, Social Security number and income |
| Bank of America credit card approval | Yes | Name, birth date, Social Security number, address and type of credit card you’re interested in |
| Capital One credit card preapproval | Yes | Name, address, email address, phone number, employment status, income, monthly housing expense, if you have bank accounts, birth date and Social Security number |
| Chase credit card preapproval | Yes (online tool is not always available) | Name, address and Social Security number |
| Citi credit card preapproval | Yes | Name, Social Security number and address |
| Discover credit card preapproval | Yes | Name, address, birth date, student status, monthly housing expense, income and type of card benefit you’re interested in |
| Navy Federal credit card preapproval | Yes (only available to Navy Federal members) | Active duty status, income, monthly housing expense |
| U.S. Bank credit card approval | Yes (only available to existing customers via mail offers) | Confirmation code that came with offer and ZIP code |
| Wells Fargo credit card preapproval | Yes | Wells Fargo customer status, name, address and Social Security number |
Pros and cons of pre-qualified and pre-approved credit cards
| Pros | Cons |
|---|---|
Helps to narrow your options from a long list of available credit cards. You may find that there are better sign-up bonuses or longer intro offers on credit card offers that companies send because you’re prequalified. You can determine if you want to risk a slight hit to your credit score by applying. There’s no commitment; if you decide you don't want to apply, your credit score doesn’t suffer. | Being preapproved might give you false hope that you can get a credit card if your credit isn’t great. Consider a You may be enticed to get a credit card that you don’t need. Just because it comes with a great sign-up bonus or 0% intro APR doesn’t mean you need it. There’s no guarantee the terms of the offer will remain the same after you apply. If the issuer determines you have bad credit, your interest rate may be higher than expected. |
Tips for getting prequalified or preapproved for a credit card
Maintaining a good credit score helps your odds of being prequalified or preapproved for your next credit card. You can improve or maintain a good credit score by:
- Paying bills on time: Since your payment history makes up 35% of your FICO score, keeping on top of your bills is essential. Consider setting up email or text reminders to avoid a missed payment. You can go a step further and automate your payments but you’ll want to keep an extra amount of buffer in there for payments — like credit cards or utilities — that may fluctuate from month to month.
- Keeping credit utilization low: Another large factor in your credit score is how much of your total credit you use. Lenders don’t like to see that you are using $800 of a $1,000 credit limit. You want your credit utilization ratio to be well below 30%, and in this scenario, it’s 80%. If you’re working on building credit and don’t have a large credit limit, you can keep your credit ratio low by paying off your balance each week. For example, if you have a credit limit of $1,000 and spend $200 a week you should pay off that $200 each week until you get to the final week of the month. On the statement closing date, your $200 balance will show that you’re using just 20% of your available credit, which is within the optimal range.
- Checking to see that your credit report is error-free: From time to time it’s important to check your credit report for errors. You should look for accounts you didn’t open because there could be fraud or a data entry error that assigned someone else’s account to you. You can file a dispute by following the steps outlined by the Consumer Financial Protection Bureau. You can access free weekly copies of your three credit reports by visiting AnnualCreditReport.com. Initially, you should check all three and if there are no errors, check them monthly or rotate by week so you can monitor them without a large time commitment.
How to handle unsolicited preapproval offers
A mailbox full of unsolicited credit card offers can be just as disappointing as a bill. Besides adding to your recycle bin, these mailings put you at risk for identity theft if the envelope gets into the wrong hands. Here are a few ways to deal with the mail and protect yourself and your credit.
- You have the ability to opt out of certain mailings for five years. By signing up at OptOutPrescreen.com you can remove yourself from credit card and insurance offers. Know, however, that while this bars credit reporting agencies from including your name on their lists, lenders can get your information from other sources.
- Shred all credit card offers rather than tossing them in the trash. Some banks and office supply stores offer free shredding if you don’t have a paper shredder. You can do a search for “shredding events” to find offers in your area. Otherwise, consider the cost of shredding services a small investment for peace of mind.
- Freeze your credit if you’re not actively seeking new credit lines. Freezing your credit is simple and free to do. You have to contact all three credit bureaus to freeze the information, which prevents lenders from accessing your information. Doing this makes it more difficult for thieves to open and be approved for new accounts in your name. When you’re ready to get a new auto loan or open a new credit card, you can reverse the action by thawing your credit.
No, prequalification won’t affect your credit score. This is because the credit card issuer only does a soft inquiry as part of the process. Only once you submit all of your information and click the “apply” button, a hard inquiry will be done. A hard inquiry generally causes your credit score to drop minimally for a short amount of time.
Yes, you can be denied a credit card even if you were preapproved. The preapproval simply uses preliminary data to gauge the likelihood that you’ll be approved. However, the credit card issuer needs to consider all information, including your credit score and credit report, to officially approve you.
You shouldn’t accept the first preapproved credit card offer you receive, even though it may be your only chance at getting a credit card. There are hundreds of credit cards available, and you should consider whether the card’s terms and benefits are a good match for your financial habits.