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Credit Card Pre-Qualification and Credit Scores

Credit Card Pre-Qualification and Credit Scores

credit card prequalification

What is a Credit Card Pre-qualification?

Looking to add the Amex Platinum card to your wallet but now sure you have the score for it?  Don’t fret.  Check to see if you pre-qualify at americanexpress.com.  A credit card pre-qualification is a tool that allows you to check your odds of approval for a credit card.  Once you qualify, it simply means you are likely to get the card, however, it is not a guarantee.  The form will typically ask for your name, address, and last 4 digits of your social security number.  For this reason, pre-qualifications only provide the lender with partial information.  And unlike actual applications, you can submit multiple pre-qualifications without any damage to credit scores.  That’s because the lender does a soft pull on your credit report.

Will a Credit Card Pre-qualification hurt my credit score?

Soft pull vs. hard pull

The simple answer is no.  When a lender does a ‘soft pull’ on a credit report, it simply means they have pulled just enough information to predict your chances of approval.  Another type of soft inquiry happens when consumers check their own credit report.  In either case, no one except the consumer can see the inquiries.  Finally, pre-qualifications do not affect credit scores unless you follow through and apply.

In the event that you do apply for the credit card, the lender will do a ‘hard pull’ on your credit report.  Hard pulls or hard inquiries can affect credit scores, especially if there are too many of them.  These types of inquiries account for 10% of credit score calculation.  Finally, all inquiries remain on credit reports for up to 2 years, but only hard inquiries will impact your scores for up to a year.  So if you are trying to improve your credit score, keep hard inquiries to a minimum.

Does pre-qualification mean approval?

No.  Again, credit card pre-qualifications simply mean you have met the initial criteria to get the card.  If you then decide to apply for the pre-qualified card, the issuer will then need to do a hard pull on your credit report.  In other words, the lender will need the complete picture of your report, and if approved, how much to lend and what terms.

Everyone should have a good understanding of their credit profiles.  At the moment, annualcreditreport.com will give you free weekly reports from all 3 credit bureaus.  Numerous inquiries can have a significant negative effect not only on your credit score, but eligibility on borrowing credit in the future.

Here is a list of some of the major issuers with pre-approval/pre-qualification:

ISSUER

Capital One

American Express

Chase

Bank of America

Discover

Citi

Barclays

WHERE TO PREQUALIFY

capitalone.com

americanexpress.com

chase.com/prequalified

bankofamerica.com

discovercard.com

Currently, Citi doesn’t offer pre-approval, but check HERE later

Barclays offers online pre-qualification for U.K residents only

BOTTOM LINE: Checking to see if you’re pre-qualified can save you the trouble of applying for credit cards you might not qualify for.  First, it prevents you from adding a hard inquiry on your credit report.  Too many can make you look like a risky borrower.  Second, you can also see the terms you qualify to get.  Lastly, it might force you to uncover any credit issues that need to be addressed.

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