Credit Card Pre-Qualification Vs. Pre-Approval

Would you rather be pre-qualified for a credit card or be pre-approved? Are they the same thing? If not, what's the difference between the two?

The terms are sometimes used interchangeably, but there are differences. Both are assessments of your creditworthiness. The big difference is in who initiates the request.

You initiate a pre-qualification when you shop around for credit card offers. To get pre-qualified, you provide basic information and agree to let the creditor do a simple credit check (called a soft pull on your credit report) to check your qualifications for a credit card. The credit card issuer will suggest the cards that you are likely to qualify for based on that soft pull.

Most major credit cards allow you to check your pre-qualification status online to make it easier to compare offers. Many credit cards allow you to see if you pre-qualify without harming your credit score.

Credit card issuers initiate pre-approvals. They have already done a quick evaluation of your credit and income level and decided to make a credit card offer to you based on the results.

Because the lender has made the effort to evaluate your credit and contact you with the offer, you're more likely to be approved if you fill out a credit card application – but neither pre-qualification nor pre-approval guarantees you'll be approved for a credit card. You still have to apply for your chosen card and undergo a more detailed credit check (known as a hard pull).

Your approval depends on the evaluation of the hard pull and the further information you supply with your application, as well as any changes that have occurred between your pre-approval/pre-qualification and credit card application submission. If you're applying from a pre-qualification, your income will be considered for the first time.

A hard pull drops your credit score slightly, while a soft pull doesn't. That's the value of pre-qualification – you can check many credit card offers without damaging your credit score. Pre-approvals have the same effect but are limited to vendor-initiated offers.

However, you should limit applications to one preferred card (and possibly one backup choice) to keep your credit score relatively high. Aside from the drop for each hard pull, applying for multiple lines of credit at the same time suggests higher risk to creditors – are you preparing to go on a charging spree that outpaces your income? Higher perceived risk means a greater chance of denial, or a poor interest rate offer to compensate for risk.

In short, pre-qualification and pre-approval are both valuable tools for credit card shopping – but they don't guarantee approval, and you only control one of them.

Prefer to keep control of your credit card shopping, or just don't want to be bothered by pre-approval solicitations at all? You can opt out of unsolicited pre-approval offers at the website OptOutPrescreen.com or by calling 1-888-5-OPTOUT (1-888-567-8688). You can opt out for a period of time, or permanently with the option to opt in again at a future date.

Before you take action on either type of credit review, check your credit report to make sure there are no errors or any signs of fraud that could bring down your score.

If your credit score is accurate but not up to par, take steps to improve it before you apply for a credit card. Revise your budget to get your spending under control. Pay all bills on time and work on building a surplus to pay down debt or serve as an emergency fund.

After your score improves, try another round of pre-qualification. You may be pleasantly surprised at the better offers you receive.

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