What does it mean when you’re pre-qualified for a credit card?

Have you ever received a credit card offer in your mail with the word “pre-qualified” written on it?

If you did, you might have wondered what the term means. This post discusses what it means to be pre-qualified for a credit card and some things you should keep in mind.

Being pre-qualified for a credit card simply means your credit health, as well as your credit score, fits some of the initial criteria required to be a credit cardholder at the relevant credit card company. Some criteria the companies will check might include:

• Annual income
• Savings
• Housing payments

The offer usually stems from a credit card company teaming up with a credit bureau to check your basic credit details. The check typically reveals to the card company that you’d make a good customer, hence the term pre-qualified. It is termed pre-screened by the Consumer Financial Protection Bureau.

Thus, you haven’t applied for the card, but the company, judging from basic details about your credit health, deems you qualified to apply. Obviously, you’re not automatically entitled to obtain a credit card from the company. 

It’s a signal and invitation to apply for a credit card. You still have to apply and go through additional screening before finally obtaining the card.

Does a pre-qualified credit card impact your credit health?

A pre-qualified credit card has no negative effect on your credit score or credit health in general. Being pre-qualified for a credit card does not mean you’re applying for a new line of credit.

Instead, the credit card company, with the help of a credit bureau, is pulling some of your credit information. This counts as a soft credit check which, unlike a hard credit check, does not reduce your credit score at all.

What to do when you get a pre-qualified credit card offer

In the event of a pre-qualified credit card offer, you’re at liberty to advance with the application for a credit card. The application now gives the company the permission to conduct a hard credit check, which may reduce your credit score.

This is when you need to consider the interest rates and possible card terms to determine whether or not to apply for the card.

A pre-qualified credit card suggests that your credit health is in at least a fair condition. If you’re approved for the credit card, use it responsibly because your credit card usage affects your credit health. 

To learn more about your credit, reach out to us.