Credit card offers: five mysteries explained – If the credit-card offer says pre-approved, are you

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As the glow of the holidays gives way to the glare of all those credit card bills, you may start to notice zero-percent transfer offers flooding your mailbox. And what offers! You have been pre-approved, pre-screened, pre-qualified, or pre-selected to receive a credit card that’s not offered to just anyone. It looks like a great deal. Should you apply? Here is a guide to sorting through credit-card offers:

1. If the credit-card offer says ‘pre-approved,’ are you approved?

The terms that sound like you’re already been screened and approved should not be taken literally. They’re marketing language. They come with a standard application and do not constitute any type of actual pre-approval.

Credit-card offers that say you’re pre-approved, pre-screened, pre-qualified, pre-selected – or any other “pre,” for that matter – are known as invitation to apply (ITA) offers. They mean that whoever made the offer – a bank, retail store, or other lender – has done a background check that might include your credit score. borrowing history, and any other personal information available to them. The bank or credit card company may have purchased a list from one of the credit bureaus that fits the criteria for people they are targeting. With that information, they decide if you meet their criteria for credit.

Because they already evaluated you, chances are you will qualify for that offer. But credit laws require the card issuer to assess your ability to pay before approving you for a card. And you have just as much chance of qualifying for hundreds of other credit cards you can find online through credit-card comparison websites like mine. The best online offers frequently represent a better deal than what you get in the mail.

So if you are interested in the card, look beyond the marketing terms and assess the terms of the credit-card offer.

How to Get Pre-Approved for a Visa Credit Card

When you're thinking about getting a new Visa card, it's nice to get a pre-approved offer in the mail. Often, pre-approved Visa cards include special offers such as zero percent interest during a promotional period or an extremely low rate for balance transfers. It isn't difficult to get pre-approved Visa offers if you maintain a good credit score and don't opt out of promotional offers through the credit bureaus.

Check your credit reports to see if there is any erroneous negative information that could make Visa issuers reluctant to send you a pre-approved offer. Under the law, you can request a free copy of your credit report from Transunion, Experian and Equifax every year. Get the reports and go through them carefully, making a note of any incorrect negatives.

Dispute any erroneous negative information. Each credit bureau will have its own dispute form on its website. If the bureaus cannot verify the negative information, it must be removed from your report. This will make you more desirable to Visa issuers who send out pre-approved credit card offers.

Opt in for special offers via the Optout Prescreen website. Optout Prescreen is the official website for opting into or out of credit card offers generated by information on your credit reports. Click the "Opt Out or Opt In" button, select "Opt In," and provide the required information. This will allow the credit bureaus to provide information about you to companies screening consumers for pre-approved credit offers.

Call your bank or credit union and ask if they have any pre-approved Visa offers for their customers. If you have been a good customer for a long time, they may be able to make you an offer.

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Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

Advertiser Disclosure: So how do we make money? We receive compensation from our partners when someone applies or gets approved for a financial product through our site. But, the results of our tools (like our credit card comparison tool) and editorial reviews are based on quantitative and qualitative assessments of product features — nothing else. Compensation may influence the products we review and write about, the order in which categories appear in “best of” articles, whether products appear on our site and where they’re placed. While we try to feature as many product offers on our site as we can maintain (1,200+ credit cards and financial products!), we recognize that our site does not feature every company or financial product available on the market.

Don’t jump at ‘preapproved’ credit card offers

Pre approval credit card offersPeopleImages/Getty Images Many people who receive offers that say they are preapproved for a new credit card account don’t understand what “preapproved” means, or why they got the offer.

What does credit card preapproval mean?

Banks and other financial institutions have a pre-screening process to determine which consumers are a good fit for a particular credit card. During pre-screening, the bank checks people’s credit histories and credit scores through a third party or credit bureau, and if they meet the criteria, the bank sends them a preapproval offer.

The major credit bureaus — TransUnion, Experian and Equifax — maintain large databases of consumer credit information that banks and other financial institutions use to target consumers with certain credit profiles. Credit bureaus compile lists of consumers who meet the minimum credit standards of its bank customers. Banks then use those lists to make credit card offers to certain consumers.

Benefits of preapproved credit card offers

Preapproved credit card offers come with several benefits. They allow people to see what is available, and the terms of preapproved offers may be better than those available to the general public. For example, a preapproved credit card offer can be worthwhile for someone who has a chance to get a zero percent APR (annual percentage rate) promotional rate for more than a year, or make a balance transfer for free with a lower interest rate.

Another benefit of preapproved credit card offers is that if a person is denied, or is approved for less favorable terms, he typically gets a letter from the lender explaining its decision. The consumer also may be entitled to a free credit report. He can use the information in the letter and the credit report to improve his credit score.

Even though a consumer has been screened for a preapproved offer, it is possible he will be rejected for the new card if he decides to accept the offer. Words such as “preapproved” and “prequalified” are unregulated, so there are no strict rules about their use in preapproved credit card offers.

A preapproved card is just an offer, and a consumer still has to apply for the card. It is more like an invitation.

Another disadvantage is that card issuers often don’t provide invitees the precise terms it offered in the preapproval letter. If a person’s credit score is not high enough, or he has a few smudges in his credit history, he might be offered a higher APR than what was quoted in the preapproval offer.

Being screened for a preapproved credit card offer does not hurt credit scores, but accepting the offer might. Banks won’t actually check an individual’s credit history until he applies for the offer. When banks request the credit information, it is called a “hard inquiry,” and that can hurt a credit score.

For these reasons, it is a good idea to be selective about preapproved credit card offers. The more offers a person accepts, the more hard inquiries there are into his credit history, and the greater it affects his credit score. Over time, however, the negative impact on the credit score fades.

Always read the terms and conditions carefully before applying for a preapproved credit card offer. Just because you were preapproved for the card doesn’t mean it’s a good fit. Always select a credit card that best suits your lifestyle and financial situation.

Review Pre Approved Credit Card Offers and Apply Online

Pre approved credit card offers are what credit card companies generally give out their prospective clienteles. This is a way of enticing people to apply to credit cards being offered by various companies. These are sent either by mail correspondence or through a telephone solicitation done by sales representatives calling on behalf of their respective card companies.

If you’re one of those people who have been getting these calls and mail solicitations, then getting a view of some of the benefits that you can acquire is considered salient rather than ignoring the whole process and the chance of getting a free application.

However, before you get into the whole course of the application, you have to determine pre approved credit card offers from pre-selected ones. There are companies that provide pre-selected and pre-approved offers and distinguishing which ones are more advantageous would be highly suggested.

Pre-selected offers are known to be random selection done by companies and chances of getting approved in this kind of approach are diminutive. On the other hand, pre approved credit card offers have more advantages since these are people who have passed the initial credit criteria of a particular credit card company.

A lot of pre approved credit card offers have favorable and practical rates coupled with higher credit limit and cash advance options. Other credit card companies also offer balance transfers with 0% interest rate given a specified period of time. For this reason, a lot of credit card holders have been saving a lot of money given a 0% interest rate on both purchases and balance transfers as most companies offer no balance transfer and cash advance fees.

Some of the most prominent and recognized credit card companies that have pre-approved credit card offers are Capital One and Chase bank. These companies utilize either mail correspondence or a free telephone application enabling the client to get the card within 15 business days upon approval of the bank.

Receiving a pre-approved offer is a clear indication that you are a person of good standing and you’ve been managing your finances and establish stability when it comes to payment terms. This is how credit card companies determine your credit worthiness and this kind of offer serves as a good point on your part. The fact that you are pre-approve would also give you the opportunity to apply for loans and other banking transactions less complicated.

There are also other debtors who have been pre-approved by other bank yet, declined by some credit card companies. If given this kind of scenario, it would be best to grab pre approved credit card offers as a way of rebuilding your credit history into something favorable.

On the process of choosing which ones to apply for, it would be a good option if you go for a credit card company holding a reputable standing in the industry. They will not only give you good rates but also the security in giving out your personal information in the application process to avoid getting a fraudulent offer.