Credit Card Pre-Approval Offers and Tips

When you apply for a new credit card, the lender will initiate a hard credit check, which could reduce your credit score by up to 5 points. This is true for every credit card that you apply for, even if those applications occur within a short period of time (“rate shopping” doesn’t apply to credit cards).

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This can be somewhat of a nuisance, but thankfully, it’s not the only way. Credit card issuers offer something known as pre-approval or pre-qualification, whereby they run initial checks (using only a soft credit check) to determine whether or not you will be a good fit.

Offers and Preapproval

The credit card offers you receive in the mail are not sent at random. The creditor will pull your credit report to determine if you are a good fit and if so, it will send you the offer. A soft credit check is initiated, which means it does not show on your credit report and will not impact your FICO score. 

However, this doesn’t mean you will be accepted for that card. This process is known as a pre-approval and means the creditor has conducted some basic checks to determine whether or not you’re a good fi. You still have to submit a credit card application and there is no guarantee you will be accepted or you will receive the interest rate initially advertised.

The same is true for all pre-approvals. Once you apply, the creditor will look at some of your information and then decide if you should be pre-approved or not. You will be given an interest rate based on the information gathered and when you apply, this might be the rate you receive. But there is no guarantee that will be the case. The interest rate could change, and the offer could be pulled, either because the creditor found additional information when initiating a hard inquiry or because your circumstances have changed since pre-approval.

What’s Needed for Pre-Approval?

All credit card issuers have different requirements with regards to pre-approval. Some of them are quicker and easier than others, with credit card companies like Capital One processing things fairly quickly when compared to companies like Discover, which requires a little more time and effort on behalf of the consumer.

In most cases, you will be asked to provide personal information such as:

  • Full Name
  • Street Address
  • Gross Income
  • Monthly Rent or Mortgage Payment
  • Last four digits of your Social Security number

The creditor will then pull your credit history and check your credit profile to see if you’re a good fit. The whole application process is relatively quick and painless.

Soft Inquiry vs Hard Inquiry

A soft inquiry will not impact your credit score, while a hard inquiry will. The credit card pre-approval process uses a soft pull, which means the creditor has basic information about you and can use this to determine if you’re a good fit. 

Only when you take things to the next level will a hard pull be initiated. At this point, your creditworthiness will be checked to see if you qualify or not and, if so, what sort of credit limit and interest rate you will be offered.

Improve Your Chances of Getting Pre-Qualified

If you’re getting rejected for pre-qualification or have been accepted but are being refused following the actual application, it’s likely there are some major issues with your credit report:

Your Credit Score is too Low

The main thing that creditors will focus on is your credit score. If it’s too low, they’ll turn you down. 

If you’re being turned down but your score seems to be okay, it might be worth checking with other providers. There are three major credit bureaus (TransUnion, Experian, Equifax) and they use several versions of two different scoring systems (Fico Score and VantageScore). 

If there are major discrepancies between how different systems are scoring specific data points or they have different information, this may affect your chances. Pull your credit report from all free providers (you can get a free credit score once a year) and confirm they have accurate information and that you haven’t been the victim of fraud.

If you have bad credit you can still get accepted, but the best credit cards will be out of reach. You may need to resort to cards that don’t have much by way of cash back or travel rewards, and also have high fees and rates. 

You Have Too Many Cards

Some credit card issuers will limit you to a specific number of credit cards. Capital One, for instance, will not allow users to have more than 2 personal cards. 

Previously, we have discussed how it is possible to maintain a good credit score if you have dozens of cards, while noting that the record holder has over 1,500. However, if those cards carry balances, it’s a red flag to credit card companies and they may refuse you because you’re an increased risk or because they have company limits.

You Have Too Much Debt

Your debt is not judged based purely on size. Spare change to one person can be a crippling debt to another. For instance, while someone earning $100,000 a year wouldn’t concern themselves with a balance of $2,000, that sum could be insurmountable to a single parent earning less than $800 a month.

Credit reports use something known as a credit utilization ratio to get around this issue. This ratio compares your total available credit to your debt. If you have $1,000 in credit card debt it may seem innocent, but not if that debt is spread across two cards with maximum credit limits of $500 each. In that case, you’ve used 100% of your total available credit and will scare lenders away.

Best Cards for Pre Approval

You can get preapproval with most major banks and providers. To help you get started, we have listed a few of our favorite credit cards for pre-approval below:

Blue Cash Preferred American Express

American Express is the king of the rewards credit card. However, AmEx cards are at their best when appealing to medium and high income borrowers and you may struggle to benefit from these cards if you’re not in those earning and spending brackets.

The Blue Cash Preferred credit card is a perfect example of this. You must have very good credit to apply and you also need to cover a $95 annual fee. However, if you can afford that fee and qualify for the card, you’ll get a welcome bonus of $250 (when you spend $1,000 in three months) and between 1% and 6% cash back.

The 6% rate applies to every dollar that you spend at qualifying supermarkets, while the 3% rate is offered for all purchases at gas stations. There is also a 1% fixed rate for everything that doesn’t fit into one of the other categories.

Furthermore, in recent months, AmEx has added a couple of extra bonus categories, with 3% for transit (taxies, rideshares, tolls, parking) and 6% for subscription services. None of these bonus categories have limits, but they are short-term and may disappear soon. They may have even gone by the time you become a member, so apply now to take advantage of them when you can.

Chase Freedom Rewards Credit Card

Not only does the Chase Freedom rewards card offer an impressive interest rate, with no annual fee, but there is also a sign-up bonus of $150 when you spend $500 in the first three months and a rewards rate that goes as high as 5%.

This 5% rate is paid for every dollar that you spend on rotating quarterly categories, including grocery stores, supermarkets, gas stations, and more. There is a limit of $1,500 for these categories every quarter, after which the cash back rate drops to 1%.

Chase Freedom Unlimited Credit Card

In addition to a rewards rate of 1.5%, which is a good deal higher than the fixed rate offered by the Chase Freedom, the Chase Freedom Unlimited has a sign-up bonus of $150. This is released when you spend just $500 over the first three months of use, and there is no annual fee.

You need at least a Good credit score to get the Chase Freedom Unlimited credit card and once you do, you’re offered an intro rate of 0% for the first 15 months of balance transfers and purchases.

Wells Fargo Propel American Express

With the Wells Fargo Propel credit card from AmEx, cardholders can secure 20,000 points with a sign-up bonus and either 1 or 3 points for every dollar they spend after that.

There are no rotating bonus categories here. Instead, the 3 points are rewarded for fixed categories that include everything from transit costs (polls, taxis, rideshares) to flights, gas, and certain streaming services.

You’re not limited to how many points you can earn, and you can even convert your Wells Fargo Propel reward points to other credit cards offered by Wells Fargo.