Pre-Approvals - What Does It Really Mean?
You may have received physical mail, an email, or even come across a webpage that says “You are Pre-Approved” for a variety of credit cards. But have you ever wondered what that actually means? Does it give you better odds of being approved for that credit card? Does it really mean anything substantial?
How Do You Get Pre-Approved?
Most pre-approved mailers and emails that you run into are generated by various advertising and marketing departments from those credit card companies. They have received some of your information via the buying and selling of consumer data. You can actually opt-in (and opt-out) to receive promotional mailers and advertisements from many card issuers in your account.
Do Pre-Approvals Give You Better Odds?
Not necessarily. That is because it’s a loose term that is used very widely within the world of credit cards. A lot of time, issuers don’t even run a soft inquiry or any sort of financial background information from you before they send you a pre-approval. A soft inquiry is also not the most accurate in terms of determining whether or not you would be actually approved (that’s why they run a hard inquiry on you when you apply).
What Happens When You Apply Via A Pre-Approval?
The process of applying for the card in which you were “pre-approved” for is pretty much the same as if you were applying for the card from any other link. You still have to fill out your information and have a hard inquiry run on your financial background.
Are Pre-Approval Offers Better?
Sometimes pre-approved offers CAN be better than a public offer, especially if the marketing team is really trying to acquire new customers. A good example of this is with American Express or even Chase with their 100K Sapphire mailers. But always make sure you check between the pre-approved offer, public offer, affiliate links, and referral links. If you want help with this, give us an email.
In addition to this, pre-approvals do not go around many “rules” that various card issuers such as the infamous and unofficial “5/24 Rule” that Chase Bank uses.
Exceptions
There have been reported exceptions to this with various issuers such as Chase Bank. Within your account, you have a pre-approval section which can have various Chase cards. People have reported that Chase approved them from these offers without a hard inquiry or even had in the terms that “You are already approved”. But this is a your milage may vary situation so proceed with caution.
Bottom Line
Pre-Approval offers do not guarantee an approval. It’s just a marketing tactic to help acquire new customers by getting their hopes up and giving a false sense of security. I’ve personally run into this issue with Capital One TWICE for the same product and got denied. For me, when I get a pre-approval letter, I’ll check to see what the terms are and compare it with the public offer or even the affiliate offer. If the pre-approval offer is better, I’ll keep it for a while in case I do decide to go for it since there is usually a specific offer code that’s associated with it. If you choose to do the same, take note of the offer’s expiration date so you don’t miss it.