You’ve probably seen the term “pre-qualified” when looking for a new credit card. But what does it actually mean? Find out in this blog post.
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What is a pre-qualified credit card?
Pre-qualification is a process credit card issuers use to determine whether you’re likely to be approved for a credit card. When you’re pre-qualified (also called pre-screened), it means the issuer has reviewed your credit report and decided that you fit its general criteria for approval.
Being pre-qualified for a credit card doesn’t guarantee you’ll be approved when you apply, but it does increase your chances. When you’re pre-qualified, the issuer will usually give you some idea of the terms you might be approved for, such as the credit limit or interest rate.
How do you become pre-qualified for a credit card?
There are a few ways you may become pre-qualified for a credit card. The most common is when a credit card issuer uses a soft credit pull to check your credit report and offer you a card based on their own internal criteria.
You may also become pre-qualified for a credit card if you’re invited to apply based on behavior that’s similar to other customers who have been extended an offer. For example, you may get an offer because you carry a balance on another credit card or because you frequently shop at the same store where the issuer has a co-branded credit card.
In some cases, you may need to provide additional information to be pre-qualified for a specific credit card. For example, you may have to give your income or employment information before you can get an offer.
What are the benefits of being pre-qualified for a credit card?
Being pre-qualified for a credit card means that you have a good chance of being approved for the card if you apply. Credit card companies use a variety of factors to decide whether to pre-qualify you for a card, including your credit score, credit history, and income.
There are several benefits of being pre-qualified for a credit card. First, it shows that you are a responsible borrower who is likely to repay any debt you incur. This can be helpful if you are trying to build or improve your credit score. Second, being pre-qualified can give you an idea of what credit limit you may be approved for, which can help you budget and plan your spending. Finally, some credit card companies offer special deals or bonuses to customers who are pre-qualified, such as waived annual fees or lower interest rates.
What are the drawbacks of being pre-qualified for a credit card?
While there may be some advantages to being pre-qualified for a credit card, there are also some potential drawbacks that you should be aware of before you apply.
First, when you are pre-qualified for a credit card, the issuer is not required to give you the best possible terms. This means that you may end up with a higher interest rate or less favorable terms than if you had applied for the card on your own.
Second, being pre-qualified for a credit card does not guarantee that you will actually be approved for the card when you apply. The issuer will still need to pull your credit report and review your credit history before making a final decision.
Finally, if you do not meet the issuer’s standards for approval, you may be asked to provide additional information or documentation. This can include things like tax returns, pay stubs, or bank statements. If you are not able to provide this information, your application may be denied.