preapproved credit cards - If you are thinking of applying for a Capital One credit card because you have received your pre-approved offer in the mail and you are asked to respond to your invitation at, think.

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How to Evaluate Your Pre-Approved Credit Card Offer

Preapproved credit cards

Finding a new a credit card is a lot like waiting for a text message. When you want one, none come your way. But once you don’t need a new card, the offers come flooding in.

These credit card offers usually come with smart copy on the envelope that includes your name and desperate calls to action. Apply now and no interest for the next decade! Hurry up and apply or the envelope disintegrates into dust!

But as much personalization and urgency the credit card companies try to create, it’s easy to see that these are mass-produced offers. The question is, are they any good? Let’s find out!

How pre-approved credit cards work is fairly simple. Credit card issuers reach out to credit reporting bureaus for a list of borrowers that meet specific criteria. This inludes borrowers whose credit scores fall within a certain range.

Once they have their list of top potential customers, they send out mailers asking them to apply. These mailers will tell people that they are “pre-approved” for a specific type of offer. In reality, they’re pre-approved to be able to apply for that offer.

Once someone applies, then the offer could end up changing (or going away altogether).

One major bonus of pre-qualified credit cards is that the offer is likely the best offer they can give you. After all, this is a marketing tactic they’re using to get you on board – and they’re not going to use their B-game to do it.

According to Tim Baker, CFP® and founder of Script Financial, “Some of the most lucrative offers are those that are mailed for targeted marketing offers.” If you’re looking for a new credit card, it’s not such a bad thing to have the best you can get mailed to your door.

2. The pre-approval shows what you can get without a hard inquiry on your credit

As soon as you start applying for credit cards, lenders are going to make what’s called a“hard inquiry” on your credit report. Every once in awhile that’s okay, but do it too frequently and your credit score can take a hit.

However, with a pre-qualified credit card offer, that credit card issuer has already done what’s called a “soft inquiry” on your report and deemed you worthy of an offer. These soft inquiries don’t affect your credit score.

According to Baker, a hard inquiry can stay on your credit report for two years. Therefore, seeing what you can get by examining the pre-approved credit cards you’re offered is a better way to shop around if you’re worried about your credit score.

One major con of pre-qualified credit cards is the misleading nature of their alternative name, “pre-approved credit cards.” You are not, in fact, 100 percent pre-approved. You are pre-qualified. A credit card issuer has preemptively decided you’re qualified to apply for a specific offer.

But you’re not actually approved for that offer until you apply. And, after you apply, you might find out that you’re not approved for that offer at all.

Kerri Moriarty, Head of Company Development, Cinch Financial, explains why:

Credit card preapprovals are not a guarantee. Sort of like getting a car insurance quote, you may or may not be approved at the quoted rate once you complete the full application.

The credit card company reserves the right to reject your application once they evaluate your full profile.

Chances are, if you made it this far, you’ll likely be approved for something. But it might not be that same offer they advertised to you in the mail.

While it’s nice to have various offers come to you, focusing only on those could lead you to miss out on something better. Moriarty goes on to explain how this works:

It’s important that consumers know that when they receive an offer for a pre-approved credit card, it’s not a highly personalized offer.

The credit card companies evaluate consumers based on usual underwriting standards like your credit score and payment history, but the targeted offer is not based on your current credit card situation.

If you really are in the market for a new credit card, you should shop around and make sure you’re getting the best offer for you.

How to improve your chances of getting the best card

Shopping around for the best credit card might not be so easy if you’re not sure how to improve your chances of getting approved – or if you don’t know what is best for you. Here are a few things to keep in mind.

Always work on your credit score. Like the example I mention above, you won’t care about it until that’s the only thing you care about. So work towards building your credit or improving your credit now to ensure you can get a good offer when you need one.

How? There are a few simple practices you can follow, which you can find a lot more detail about from Experian. But for now, let’s focus on the basics.

  • Make all of your payments on time. I’m not just talking about debt payments. This includes cell phone payments, library card fines, rent, electricity, and so on. Don’t let any delinquencies hit your credit report. And remember that anything later than 30 days is considered a delinquency – you don’t have to fully default for something to negatively affect your report.
  • Keep your credit utilization as low as possible. If you have any revolving credit already, keep your balance at zero if possible and, if not, no more than 30 percent of the credit limit.

Payment history (above) and credit utilization make up more than half of your score, so focusing on these two things will be a great way to improve credit.

There are a lot of credit cards out there and a lot of offerings you might not know about. Let’s go over a few examples:

  • Credit newbies or those who can’t get approved for a credit card should try a secured credit card .
  • Anyone looking to consolidate debt with a low- or no-interest credit card will want to look at a balance transfer credit card.
  • For those with big dreams of traveling the world, a travel rewards credit card can help make it happen.

Sifferent types of credit cards can help you achieve different goals. As long as you use them responsibly (pay off your balance every month before interest accrues), then credit cards can help you do a great many things on your financial wish list. It all comes down to finding the right one for you.

If you are getting pre-qualified credit card offers in the mail, how do they stack up against your financial goals?

Improving Credit History With Preapproved Credit Cards

A large section of the society is becoming a victim of bad credit or the limited credit history because of certain unavoidable circumstances. Many of the affected guys opt for various methods to get out of such embarrassing situations. The new credit card is considered as the best for improving our score and building a steady history. But it is not so easy to get approved for such cards if you have poor credit history. The hard inquiries on the other hand may decrease your chances of getting such preapproved credit cards for bad credit. It is suggested to first get pre-qualified to obtain such a card.

Preapproved credit cards

Considerations for the guys with poor credit – Few people make unwanted credit mistakes that damage their credit score. Credit card is the simplest method to repair your damaged reputation. Those suffering from bad credit scores should know the same. Many of you may like to get out of such awkward situations through short term loans or the cards. Those interested in the latter may check out the best bad credit loan and sign up for a credit monitoring service. Just avoid applying for the best rewards cards; cash back cards or the travel cards. Considering the prepaid debit card is the wise option.

Copies of your credit report from the relevant agencies can be obtained each year free of cost. This would ensure that the information with regard to the credit history is correct and up to date. The concerned site may be visited for this purpose. Use of the credit monitoring service is the next step. Such a service protects you from the identity theft and future negative impacts.

Pre-qualification – This concept helps in giving you the idea about your chances of getting the preapproved credit cards for bad credit. People interested in getting pre-qualified may approach the top card issuers that facilitate their web pages for helping the people for pre-qualification. They include the American Express, Bank of America, Capital One, Chase, Citi, Discover, the US Bank and other relevant pages.

Boosting your credit score – Those with poor credit history should try getting the secured credit cards that need a cash deposit usually equal to the credit limit. They are feasible as getting pre-qualified in terms of these cards is quite easy as the bank does not lose anything if you default. It is always wise to check the possible error with regard to your credit report that may damage your standing. Free copy of such info can be obtained each year from the concerned agencies.

Repaying the debts right away is the best method to clear up the debts in collections or default. Simultaneously ensure keeping your bills current. Remember to pay all your bills on time and each time. Do not just delay such payments as they may damage your credit scoring. Next step to improve your credit history is to pay down the balances right now.

Candidly, the preapproved credit cards for bad credit can help you in saying NO to the awkward burdensome situations.