What Is Credit Card Preapproval?

Definition & Examples of Credit Card Preapproval

A young woman is shopping online with smartphone and credit card in hand.
••• Tashdique Mehtaj Ahmed / Getty Images

Credit card preapproval means that you've met a card issuer's initial criteria for a card. This doesn't mean you'll be approved, though.

Learn more about credit card preapprovals and how they work.

What Is Credit Card Preapproval?

Credit card issuers look for ways to promote their cards and encourage consumers to apply. Credit card preapproval is one way to do that. Card issuers prescreen consumers based on criteria like meeting a minimum credit score. To do this, they complete a soft inquiry, which is a credit review that doesn't impact your credit score.

Card companies then send out mailers to those consumers letting them know they've been preapproved and inviting them to apply for a card. Consumers aren't approved for the card until they apply and the card issuer checks their credit report and score. This is a hard inquiry, which means it's a credit check that impacts a credit score.

How Credit Card Preapproval Works

Credit card companies prescreen potential cardholders and mail them promotional and marketing offers, telling them that they are preapproved or prequalified for one of its cards. If you receive one, keep in mind that these aren't an offer for a card, and there's no guarantee you'll be approved. You've only been prescreened. Think of it as an invitation to apply for the credit card rather than a firm offer.

After you receive the prescreened offer in the mail, you can apply for the credit card to determine if you are approved. During the preapproval process, you'll need to provide information like your name, address, gross annual income, monthly rent/mortgage payment, Social Security number, and more. Once you submit the form, you'll find out if you've been approved for the credit card.

If you're denied for a credit card, the card issuer will send you an adverse action notice. This notice explains why you were turned down for credit, your credit score (if used in the decision to deny you credit), and the name, address, and phone number for the credit bureau that supplied the information. You'll also be entitled to a free credit report if you're denied because of information in your credit report. You'll have 60 days to request this free credit report.

You can use this opportunity to figure out what's hurting your chances of being approved and work to improve your credit score.

Do I Need Credit Card Preapproval?

You don't need to be preapproved for a credit card. You can directly apply for one by visiting a credit card company's website. Many credit card companies also allow you to go to their website and see if you're preapproved for a credit card.

Proactively checking to see if you're preapproved for a credit card can save you the trouble of applying for credit cards that you may not qualify for. This is important since new credit applications are considered hard inquiries, which can lower your credit score and make it more difficult to get future applications approved.

Proactively getting preapproved for a credit card gives you the chance to see what terms you could potentially receive if you were to officially apply for a credit card. You get a snapshot of what could happen if you applied and it gives you the chance to decide whether you want to move forward with that credit card.

Keep in mind that the credit card offers you receive in the mail may not be the best out there. Before you apply for a card after receiving that prescreened offer, go online to check the card issuer's most recent offers along with those from other issuers. You may find something better than the offer you received in the mail.

Compare the credit cards you're interested in by looking at their rewards, perks, interest rates, and fees. Once you find the card you want in your wallet, see if you can submit a preapproval form to determine whether you may qualify for it or not.

How to Stop Credit Card Preapprovals

If you no longer want to receive prescreened credit card offers in the mail, you can limit them. Opt-out by visiting OptOutPrescreen.com. You can opt-in again on the same website if you previously opted-out.

Opting-out will stop prescreened offers that used information from the three credit bureaus, but you may still receive offers from companies you already do business with or from companies who got your information from somewhere besides the credit bureaus.

Key Takeaways

  • Credit card preapproval means that you've met a card issuer's initial criteria for a card. This doesn't mean you'll be approved, though.
  • Credit card preapprovals are a way card issuers market their cards. They prescreen consumers using criteria like a minimum credit score. 
  • If you receive a preapproval, you have to apply to find out whether you're approved. This results in a hard inquiry on your credit report, which can lower your credit score. 
  • You don't need to be preapproved to apply for a credit card. 
  • You can opt out of preapprovals by visiting OptOutPrescreen.com

Article Sources

  1. Consumer Financial Protection Bureau. "CFPB Consumer Laws and Regulations: FCRA." Page 30. Accessed Aug. 16, 2020.