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Credit Card Pre-Qual: What It Is & How It Works
Credit cards can be an important part of modern financial management, offering convenience and value to consumers. With various options available, card issuers try to help consumers by providing pre-qualification services.
Credit card pre-qualification helps consumers to explore potential credit card offers without affecting their credit scores. Understanding the difference between pre-qualification and pre-approval will help individuals to make informed decisions about their financial goals and credit card usage and make better choices in their overall financial planning.
What is credit card pre-qualification?
Credit card pre-qualification is a bank's process for determining whether a consumer meets its initial criteria to be eligible for a credit card. It does not represent an actual credit card application, and pre-qualifying doesn't mean that you will receive a credit card. It does, however, enable banks to provide specific information about credit card terms and products for which you could qualify.
To pre-qualify for a credit card, consumers typically need to provide basic financial information such as:
- Annual income
- Monthly rent or mortgage payments
- Current debt
- Savings amounts (in some cases)
This information helps lenders assess the individual's creditworthiness and financial stability without pulling an official credit report.
How does getting pre-qualified work?
After receiving the above information, the lender goes through a few key steps.
- Lender reviews financial information
The financial institution reviews and verifies the information provided by the consumer - Meeting lender's requirements
To pre-qualify, individuals must meet some or all of the lender's criteria, which may include credit score, income level and other factors
- No effect on credit score
Pre-qualification typically involves a soft credit inquiry, which does not impact the applicant's credit score. This is different from a hard credit inquiry, which occurs during the actual credit card application process - Soft credit inquiry
A soft credit inquiry is a preliminary check that provides an overview of an individual's credit profile. It does not indicate that the individual has actually applied for credit and does not affect their credit score. It helps lenders offer personalized credit card options based on the information provided
Pre-qual vs. pre-approved: What's the difference?
A credit card issuer may offer both pre-qualification and pre-approval options, but these have different implications.
We have seen that a pre-qualification involves a preliminary assessment based on basic financial information. It is typically sought by the consumer. Pre-approved credit card offers often come from the issuer, which has checked with credit bureaus and seen that the consumer meets the general criteria for approval.
Neither one means that you have been approved, nor does it guarantee that you will be approved. However, pre-approval tends to be a better indicator of a consumer's chances of approval.
Pre-qualification
- Soft credit inquiry. This does not impact your credit score
- Submit basic personal and income information. Generally, these can be completed a number of ways, including online, in person or over the phone
- Does not guarantee approval. Pre-qualification is only an initial assessment
- Instant results. Consumers receive immediate feedback on potential credit card offers based on the preliminary financial information they submit
Pre-approved
- Typically involves a soft-hard credit inquiry. This type of inquiry does not affect your credit score
- More in-depth financial information needed. When consumers request pre-approval, as opposed to receiving notice that they have been pre-approved for a card, they may be asked to submit additional or more thorough financial details for a comprehensive assessment
- Does not guarantee approval. It's not a final approval, but is a better indicator of possible success than pre-qualification
- Results timing varies. Pre-approved offers may be instant or take a few days to process