Should You Get Pre-Approved Before Applying for a Credit Card?

Have you recently been notified that you’re pre-approved for a new credit card?

Whether it’s a solicitation in the mail, a personalized email or a direct offer from a card issuer via phone or on its website, the term “pre-approved” appears often in credit card offers in 2023.

You may be wondering: “What does that mean, exactly?”

And even if you understand it, you may want to know how useful it is to have a pre-approval prior to applying for a credit card.

In this article, we’ll walk you through what you need to know about credit card pre-approvals. We’ll also get money expert Clark Howard’s thoughts on the topic.

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What Does It Mean To Be “Pre-Approved” for a Credit Card?

A credit card pre-approval means that a credit card issuer has prescreened your financial profile and determined that you meet some basic criteria for receiving their credit card.

It DOES NOT mean that you’re guaranteed approval if you apply for the credit card.

Think of a pre-approval as an issuer saying: “You’ve passed the first level of screening for our card and we consider you a promising candidate to apply for the card.”

You may be wondering how they know enough about you to make this determination. The likely source was a soft credit inquiry. And if you didn’t request the pre-approval, it likely was done without your knowledge.

That may alarm you, but don’t worry. A soft inquiry is different than a hard inquiry on your credit report and does not negatively impact your credit score.

“There are people inquiring about your credit status all of the time,” Clark says. “That does not affect your credit standing or credit score. For example, people you already do business with, such as banks, credit companies and credit unions, may already be checking your credit every 30 days. Maybe even more. They’re paying to continually monitor your credit.”

Issuers who conduct a soft inquiry can find out key information on your credit score and payment history. And if they have an existing relationship with you, they can pair all this information together to predict whether you’re a good candidate for the card.

A more thorough investigation of your financial profile will be done once you apply for the card. Your application will likely require giving permission for a hard credit inquiry, which will give the issuer even more access to your credit information.

That hard inquiry DOES impact your credit score and could reveal some red flags that cause the card issuer to change its mind.

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Should You Seek Pre-Approval Before Applying for a Credit Card?

Oftentimes you’ll receive notification of pre-approval for a random credit card that doesn’t interest you. Those mailings should probably end up shredded and placed in your recycling bin.

But what if you have your eye on a rewards or cash back credit card that hasn’t solicited you with pre-approval messages?

If you have a strong credit score and haven’t applied for any other lines of credit recently, you could simply apply and hope that your financial record speaks for itself.

That could be too risky for some consumers, though.

Though not a guarantee of acceptance, securing a pre-approval via soft inquiry can help you determine your likelihood of acceptance before submitting an official application and triggering a hard credit inquiry.

Those interested in going this route have a couple of options to test the waters with the credit card issuer before submitting to the hard inquiry that accompanies an official application:

• Ask the card issuer directly for a pre-approval
• Use a third-party tool to understand your likelihood of acceptance

Ask the Card Issuer Directly for a Pre-Approval

Many card issuers have a spot on their website where you can actually submit a request for a pre-approval.

The issuer will ask for basic identifying information on you, such as your name, address and the last four digits of your social security number. This is so they can gather financial data on you via a soft inquiry and determine whether you’re someone they want to pre-approve.

Here’s a sample of a pre-approval form from Chase, which has a large menu of consumer and business credit cards:

You’ll notice that you have to acknowledge that this is both “not a credit card application” and that it “will not affect my credit score.”

This is good. Make sure you’re identifying this type of language on the website of the card issuer you’re corresponding with to ensure you’re not submitting to a hard inquiry on your credit.

You’re likely to receive information on which cards you may be pre-approved for shortly after submitting this information.

Even if you don’t receive the feedback you’re hoping for on a specific card, the card issuer is likely to add you to their solicitation list so that you receive offers in the future.

Use a Third-Party Tool To Understand Your Chances

You may also be able to get some free pre-approval information from a third-party affiliate that could provide other financial services in your life.

One of the popular ones is Credit Karma. It has a tool that analyzes your likelihood of approval for select credit cards.

“Credit Karma, which I think is a very useful tool for you to have in your life, gives all of its stuff away for free in return for being able to make revenue off of things they recommend to you,” Clark says. “One of the areas that Credit Karma makes a lot of money is recommending specific credit cards. They even have a tool that allow you to know– before you apply and have a hard inquiry on your credit– the likelihood that you’ll be approved for that credit.”

This option is touchy because it has been in the news for legal reasons regarding deceptive practices with “pre-approved” claims.

Clark discussed the Credit Karma lawsuit and strategies for avoiding hard credit inquiries during a recent episode of the Clark Howard Podcast:

Remember: Just because a tool or a card issuer says that you’re pre-approved does not mean you will successfully apply for the card.

Experian is another company that offers to check for pre-approval offers at no cost alongside free access to your credit report and FICO score.

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Final Thoughts

Getting notification of pre-approval for a credit card is a “good sign” for your chances of successfully applying for that card, but it is not a guarantee of acceptance.

So whether you get an unsolicited pre-approval notification or ask for one directly, you should understand that it’s really just a prescreen of your financial data based on a soft credit inquiry.

An actual successful application for a credit card will require a hard credit inquiry. This will “ding” your credit score no matter if the card issuer decides to approve or deny your application.

Still, pre-approvals can serve a purpose for people who are assessing the likelihood of approval for a credit card. Just make sure you’re viewing it properly as a tool for decision-making rather than any sort of guarantee.

Do you have a success or failure story based on a credit card pre-approval? We’d love to hear about it in the Clark.com community.