What Are Pre-Approved Credit Card Offers?

While receiving mail can be a good thing, receiving junk mail is almost always a pain. Most of the junk mail that people get today consists of pre-approved credit card offers. While getting such offers may mean that you could be eligible to get a credit card, it certainly is no guarantee that you will get one if you fill in the details on the attached form and send it back to the issuing company.

In fact filling out pre-approved credit card letters and sending them back is a sure fire way to hurt your credit score. You need to understand how the pre-approvals and credit card issuing processes work.

Making The List For Pre-Approved Credit Card Offers

Banks try to target their credit card offers to people who can qualify for a credit card. To ensure that they reach the right people, most credit card companies buy lists from the three credit reporting bureaus (Equifax, Experian, and TransUnion). To ensure that the list is valid, the companies generally send the reporting bureaus a set of minimum standards that the bureaus can use as a screen for putting together a list of potential customers. Another alternative that the banks tend to use is send a list of clients from marketing companies databases and asking the credit reporting bureaus to match people with similar criteria. The pre-approved credit card offers are then sent to everyone on the list.

Pre-Approved Really Means May Be Eligible

A pre-approved credit card offer generally comes with a set of introductory interest rates on the credit card and a form to be filled out. Once the form is duly filled and sent in, it is received by a screening company that may be completely different from credit card issuing firm. The information is fed in and a credit check is performed on the person. The ensuing credit report is what finally determines whether the person receives the credit card based on the terms sent in the pre-approved offer or completely different terms or if the person is rejected altogether and will not receive the card. While a pre-approved offer requires a credit inquiry, it does not affect your credit score. A filled in application that is sent however results in a full credit check. This credit check can affect your credit score depending on whether the credit card is approved or rejected.

About Introductory Interest Rates

Like all things "introductory," all introductory interest rates end after a pre-determined period. At the end of the set period, interest rates can rise and significantly at that. Any balance transferred from high interest credit cards on the new card may end up costing more than paying the debt off. When accepting pre-approved credit card offers one has to be extremely careful about the interest rates being charged and the terms associated with such introductory rates. It is possible that the low introductory interest rates may be applicable only to purchases made and not on balance transfers and cash advances.

When Pre-Approved Can Be A Good Thing

If you have a credit card, a good credit score and get a pre-approved credit card offer with lower interest rates, no annual fees and longer grace periods, it might be a good thing to do a little more research and then apply for it. After all, a good deal is a good deal – pre-approved or not. Another situation in which looking at a pre-approved credit card offer makes sense is when you are building credit history and have managed your previous credit card wisely.

Getting Off The Pre-Approved List

If you receive many pre-approved offers in your mailbox, there is a certain risk attached to it. One of the most common ways of identity theft is filling up a pre-approved credit offer and opening an account in your name without your consent. The Fair Credit Reporting Act (FCRA) gives you the right to get your name of pre-qualified credit card lists. Another way to get off the pre-approved credit card offers list is to write a letter to all three credit bureaus and request them to take your name off the list.