Opening your mailbox to find a “pre-approved” credit
card offer can feel like you’ve won the lottery, especially for
a consumer looking to open a new account. Even consumers with
poor or no credit can receive these offers in the mail making you
believe you have been approved for a card with what may initially
seem like great benefits and low interest rates. But the
reality is, you have not been approved until you apply and the
pre-approved offer is really not approval after all. As the
economy continues to bounce back, credit card offers are on the
rise and pre-approval offers are a key part of this industry’s
marketing. But understanding the industry of pre-approved
credit card offers will save you aggravation, frustration and
hopefully a little bit of money.
First, pre-approved credit
card offers do not affect your credit
score, at least not until you actually apply for the
credit. The majority of consumers understand that when you
apply for credit, insurance, a loan or a mortgage the lender will
access your credit file to review your existing accounts.
This access will affect your credit score but a pre-approval will
not affect your score as it is really a conditional approval or
approval based on
pulling your credit.
Second, despite your “pre-approval”, you still may be rejected
when you formally apply for the credit card. While these
credit card companies send you an approval based on where they
believe you fall on the credit score spectrum, once you apply, they
may still reject you based on what they actually find in your
report. Rejection happens more often than one would
think. For example, perhaps your credit changed between the
time you received the pre-approval offer and the time you applied
for credit. Often times, consumers get accepted for the
pre-approved cards but with much less favorable terms than was
presented in the offer. If you are in a position where you
are approved for a card but the terms are less than desirable, you
do not have to keep the card, close the account and shop around for
a card that is better suited to fit your
needs.
Third, make sure to shred any pre-approved credit offers you
receive in the mail to protect yourself from identity
theft. While these offers usually do not include any
personal information, there is always a chance someone could get
their hands on it and open up a card in your name.
Lastly, as I have discussed in a previous post, you can opt out
of received pre-approved credit card offers to save yourself
and your identity. Just like a do-not-call list for
telemarketers, there is an opt-out clause for credit card companies
to stop them from soliciting your business and filling your mailbox
with junk mail. To opt out of receiving these offers log on
to OptOutPrescreen.com to notify the three major
credit reporting agencies, Equifax, Experian and Trans Union, that you no longer wish to have
your name included on distribution lists.
For more information on pre-approved credit card offers or
discuss your situation in greater detail with a licensed attorney,
contact SmithMarco P.C. for a free case review.