8 Preapproved Credit Card Facts You Need to Know Before Applying

Offers for preapproved or prequalified credit cards do not guarantee you a card.

Each day, offers fill the mailboxes and inboxes of millions of Americans. Before accepting one of these offers, you should know a few basic facts about what you might be getting into. Don’t make your final decision until you’ve read through this list of eight facts to dispel myths about credit cards that are preapproved.

1. You Can Opt Out of Receiving Preapproved Credit Card Offers

Not everyone likes the idea of credit card agencies going through your credit report to find out information so they can offer products that you might not even want. After all, if you’re not interested, it’s simply more junk mail for the recycling bin. Fortunately, you can opt out.

The four major consumer reporting agencies — TransUnion, Equifax, Experian and Innovis — have banded together and created both a phone line and a website for consumers who don’t want to receive these offers. You can submit an opt-out request by calling 1-888-5OPTOUT or visiting www.optoutprescreen.com. Your request is good for five years, or you can make it permanent.

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Also remember:

  • Although your request should be processed within five business days, you might still receive offers from companies that got your name before it was removed from the lists.
  • You will still get credit card offers from companies that don’t use the credit bureau lists unless you opt out through the Direct Marketing Association.

Related: 6 Easiest Credit Cards to Get

2. Card Companies Make Preapproval Lists With Info From Credit Bureaus

You can qualify for preapproved credit cards from companies you haven’t even done business with because those companies get your information from the major credit reporting agencies. Although the Fair Credit Reporting Act limits who has access to your credit file, insurance companies and lenders searching for new customers can access credit report information if they commit to offering products — like a preapproved card — to the individuals they identify.

Here’s how it works: The lender lists criteria their potential new customers should have and sends it to the credit reporting agency — this is known as prescreening. The agency then runs the list through a computer program, resulting in another list of individuals who might qualify to receive the lender’s preapproved credit offers.

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Read: 10 Best Credit Cards for Bad Credit

3. Your Pre-Qualified Credit Card Application Might Get Rejected

Even though your information has been prescreened by a credit bureau, you could still get rejected for the new card after you accept the offer. Words such as “preapproved” and “prequalified” are unregulated, and there aren’t strict rules regarding what they mean when they’re used in preapproved credit card offers.

A preapproval is just an offer — you still have to apply for the credit card to receive final approval, and the credit card company doesn’t have to give you the card.  When it comes to credit card offers, think of a preapproval as more of an invitation to apply rather than an actual approval.

4. Preapproval Won’t Impact Your Credit Score, but Acceptance Will

Receiving a preapproved credit card offer doesn’t impact your credit score, but accepting the offer will negatively affect your credit. Your lender won’t check your credit until you accept the offer. When the lender requests your credit info, a hard inquiry occurs, which will remain on your credit report for 24 months, and your credit score will fall a bit.

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Be selective about the credit card offers you accept. The more offers you accept, the more hard inquiries are made on your credit, and the negative impact on your credit score will be greater.

Find Out: How Long Do Hard Inquiries Stay on Your Credit Report?

5. You Might Be Offered a Higher Rate Than Expected on Preapproved Credit Cards

If you decide to go ahead with one of your instant approval credit card offers, send your application into the lender. At that point, the lender will check your credit score and history. Although you might be approved, the lender doesn’t have to give you the precise terms it offered in the preapproval letter.

For example, if your credit score is relatively low and you have a few bruises on your credit history, you might be offered a higher annual percentage rate than was quoted in the preapproval offer.

6. Instant Approval Credit Card Offers Might Have Benefits

Before throwing your offer in the trash or rushing to get on the opt-out list, consider that preapproval offers might benefit you. Read the fine print of each offer carefully for a credit card comparison. Some credit card preapprovals offer 0 percent interest when you make balance transfers from other credit cards. Other preapprovals offer a low introductory rate for purchases.

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Note when zero-rate or low-rate offers expire, and consider whether accepting such offers might help your financial situation. Remember that in many cases a card’s rate will increase after the introductory period ends. So if you accept one of these offers, budget to pay off your balance before the rate jumps.

Related: Best Balance-Transfer Credit Cards

7. Shredding Your Pre-Qualified Credit Card Offers Protects Against Identity Theft

Shredding your unused preapproved credit card offers reduces the chances your personal financial information could be used for criminal activities, like identity theft. Many of these offers contain details including your full name and address, which is what criminals who “dumpster dive” could be looking for.

 See: 6 Best Identity Theft Protection Options

8. You Can View Preapproved Credit Card Offers Online

If you haven’t received many preapproved credit card bank offers, don’t feel left out. To see what’s available, visit the website of the bank or credit card company you might be interested in and search for its list of prescreened offers. It’s fast and free, and it won’t affect your credit score.

How to Check If You’re Preapproved for a Major Credit Card

You can view your preapproved credit card offers — including instant approval credit cards for bad credit — here:

Only you can decide if a preapproved credit card offer is right for you. The more information you have, the better equipped you’ll be to make the best choice for your financial situation.

Up Next: 10 Best Credit Cards for Building Credit

Editorial Note: This content is not provided by American Express. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by American Express. American Express credit card products are not available through GOBankingRates.com.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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About the Author

Sarita Harbour

Sarita Harbour is a former financial advisor and banker. She holds the Personal Financial Planning Designation through the Institute of Canadian Bankers, a designation equivalent to the CFP, as well as a B.A. Honors in Psychology from the University of Guelph.  With over 12 years of banking experience plus another 10 years as a personal finance and business writer creating content exclusively for online audiences, Sarita's work appears on some of North America's most well-known sites such as Forbes, Investopedia, TIME/Money, plus numerous financial institution and insurance web sites. When she isn't writing, Sarita is busy homeschooling her youngest two of seven children, gardening, chasing her chickens, and homesteading off the grid.

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