Credit card preapproval and prescreening are 2 paths to potentially score a new credit card. Here’s how each process works, who initiates it, pros and cons, and more.
What is a credit card preapproval?
Traditionally, a credit card preapproval or prescreen from an issuer involve a soft credit inquiry. (That’s a credit score or credit report review that does not ding your credit score.) Because there’s some evidence suggesting you’ll be a qualified applicant, the issuer reaches out to you and invites you to formally apply for a card.
Preapproved vs. prescreened credit card offers
There are 2 basic kinds of vetting processes credit card issuers use. The first is called preapproval. The second is prescreening. The former is when you, the customer, proactively visit an issuer’s website and answer a few questions for evaluation before officially applying. Sometimes, if you apply shortly after receiving a preapproval, your credit card application will be less lengthy because the issuer already has some of your information. (Psst … Fidelity uses a preapproval process for the Fidelity® Rewards Visa Signature® Credit Card.)
What’s the point? Both credit card preapproval and prescreening could help you understand your likelihood of getting the green light for a new card. That’s valuable info, as formally applying for a card triggers a hard credit inquiry, which can reduce your credit score by a few points for up to a year and remain on your credit report for up to 2 years.
How does credit card preapproval work?
Here’s a more detailed breakdown of the 2 processes.
Preapproval involves you entering personal information on an issuer’s website. This could include your name, address, birthdate, phone number, last 4 digits of your Social Security number, and income. Once that’s submitted, the issuer runs a soft credit check. Then you will be one of the following: 1. Preapproved and prompted to apply for the credit card, which would trigger a hard credit inquiry. 2. Conditionally approved, meaning the issuer needs more information from you to make a decision. 3. Declined, which often comes with some future communication as to why that’s the case.
Prescreen means the issuer already made a soft credit inquiry and saw you met one or more approval criteria, which is likely related to your credit score, credit history, and/or payment history, though these can vary by issuer. The issuer then notifies you that you’ve been preapproved by email, standard mail, or phone call. You can assume there’s a decent chance you’d be approved if you formally apply for that credit card in the near future.
Advantages of credit card preapproval
Here are 2 primary advantages to receiving a preapproval or prescreen for a credit card.
- Higher credit card approval odds: Being preapproved or prescreened means you have a better shot of being cleared to receive the card if you officially apply for it.
- No impact to credit score: Because issuers use soft inquiries to screen for preapprovals, your credit score stays the same. There’s no harm done for preapprovals on cards you don’t eventually apply for. If you’re actively working toward improving your credit score, it may be important to avoid setbacks unless you have a good idea that you’ll be approved for the card.
Disadvantages of credit card preapproval
Although a credit card preapproval and prescreen has its benefits, there are some limitations.
- Not a guarantee of approval: Just because you’re preapproved doesn’t mean the credit card is yours. You could be denied when you apply, despite the preapproval or prescreen. Regardless of whether you’re approved or denied, the hard inquiry triggered from this application can lower your credit score temporarily.
- It may not be the right card for you: Getting preapproved for a credit card doesn’t mean that specific card is the best option for you. Make sure to fully review the details of the card to understand whether that card is a fit.
How to get preapproved for a credit card
You can position yourself for preapproval or prescreening success by maintaining a good credit score. Habits like always paying bills on time and having a low credit-utilization rate can help. It’s also smart to keep an eye on your credit report so you can catch and correct errors and fraud that could bring down your score. You can access your full credit report for free once a year from each of the 3 credit bureaus (Experian, Equifax, and TransUnion) via AnnualCreditReport.com.
How to tell if a preapproved credit card is right for you
Applying for a credit card, regardless of whether you’re preapproved or prescreened, deserves meaningful consideration. Keep these factors in mind when deciding to pursue a credit card you’re preapproved for.
- Interest rates and fees: Review the APR (Annual Percentage Rate)—that’s the interest rate you’ll pay on any credit card debt that isn’t paid by the monthly deadline—annual fees, and other charges (like foreign transaction fees) for the card in question and compare with others. If there is an annual fee, make sure it can fit in your budget and the credit card perks justify that cost.
- Potential rewards and benefits: Fully investigate the card’s perks, comparing any rewards program to other cards. Consider whether the rewards unlocked by the credit card align with your current spending habits or would require additional spending to reap them.
- Timing: If you’re planning on applying for larger loans, like a mortgage or auto loan, a short-term score drop from a hard inquiry could translate to a higher interest rate on the big loan. Plus, taking on a new credit card may shorten your average credit history length, potentially further hurting your overall credit score.
