If you want to apply for a credit card, you may be wondering if there’s any difference when considering pre-qualified vs pre-approved. If so, this article tells you what you need to know.
What do these terms mean?
Credit card companies often send out invitations to potential or existing customers inviting them to apply for credit cards.
These invitations typically come with special offers, such as introductory bonuses, air miles or 0% introductory APR on balance transfers or purchases, for example. They’re known as either pre-approved or pre-qualified credit card offers.
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Pre-qualified vs pre-approved: what’s the purpose?
Credit card providers send these offers for promotional reasons. Doing so is an effective marketing tool used to attract new customers.
You may have received letters from card providers inviting you to apply for a credit card. These companies probably selected you from a mailing list as a suitable potential customer.
What’s the difference? Pre-qualified vs pre-approved
There is actually very little difference between these terms when they are used by credit card companies. In fact, some companies use both terms in such a way that their meaning is the same.
In both cases, card companies will prescreen mailing lists or their own customer databases using a ‘soft inquiry’. This type of inquiry has no effect on your credit score.
When there is a distinction between the two terms, this has to do with the selection method. The difference is as follows:
Pre-qualified offers
Lenders typically make to people whose credit score falls within a general range.
Pre-approved offers
Lenders make these offers to people that meet other specified criteria. For example, this could be their reliability in terms of paying their bills on time.
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What about pre-qualification?
You’ll hear the term pre-qualification in the US more than in the UK. So, if you want to apply for a credit card in the US, you can request pre-qualification.
The card company will ask you to answer some questions over the phone or fill out an online survey. Following a review of your answers, they may give you a conditional offer. The offer is based on a soft inquiry and gives you an idea as to whether or not your application would be successful.
In the UK, the closest equivalent process is a credit card eligibility checker. You can use this if you are unsure whether or not your application will be successful. You fill out an online questionnaire and submit your answers. The card company analyses your answers and lets you know if your application is likely to be successful.
Does either offer guarantee approval for a credit card?
No, this does not guarantee approval because both types of offer are made following a soft inquiry. The reason is that this type of inquiry does not identify any problems in your full credit history.
If you are pre-qualified or pre-approved, then you will need to make a formal application. As part of the formal application process, the credit card company will undertake a ‘hard inquiry’ that includes a full examination of your credit history. This type of inquiry will have an impact on your credit score.
Take home: pre-qualified vs pre-approved
If you want to apply for a credit card, you can approach the company directly. Therefore, you don’t need to worry about pre-qualified vs pre-approved.
Using a credit card eligibility checker is a good first step if you are unsure about your application.
