The best credit card dealis not always the one with the biggest writing on the envelope. Pre-approved credit card offers… we get them every day. Enough to line litter boxes, stuff pillows, and break your desktop paper shredder. You can put a lock on your mailbox but they will still keep coming, by postal mail and electronic mail, day in and day out. But are they for real? You have to wonder if “pre-approved” and “pre-qualified” really mean anything at all. Or are they just words printed on eye catching paper?
In the world of mortgages “pre-qualified” and “pre-approved” mean very different things. Pre-qualified, according to Quicken Loans, means that someone at the bank or mortgage provider has taken your basic information, which may or may not include your credit score, and believes that, if all the information is accurate, then you likely qualify for a mortgage. But you might not. And they can’t tell you the exact terms or how much you qualify for. You won’t know until the final reviews are conducted. “Pre-approved”, on the other hand, means that they have checked your credit and confirmed your ability to pay and are extending an offer of mortgage credit to you.
But what do mortgages have to do with credit cards? Well, comparing mortgages and credit cards may seem like comparing apples and oranges, but it’s really more like lemons and limes – both citrus, similar size, just a different color and flavor.
It seems that credit cards have adopted similar terms as those used in the mortgage industry. You have likely received boxes of junk mail claiming that you are “pre-qualified”, “pre-certified,” “pre-screened”, “invited to apply”, and even “pre-approved” for every credit card under the sun. But do these offers really mean anything?
Most professionals agree that these are just marketing terms that credit card companies use to encourage applications. They are, perhaps, adopted from mortgage lingo, but without the true meaning that they have in mortgages.
When you receive a credit card offer, with any of the above language attached, it means that someone probably looked at your credit report and thinks you are a good candidate for their card. But they have not fully approved you, just compared you against a few metrics. Sending these out costs money, so they don’t send these to just anyone, believe it or not. But they probably do cast a pretty wide net hoping to pull in a few fish. In addition, this is not necessarily the best credit card deal that you qualify for.
So, what you want to know is if this offer is real. Simply stated, should you “accept” the offer?
Accepting the offer really means applying for the credit card. Well, there is a good chance that you will be accepted if you apply, because you did fit the profile that company is looking for. But it is not guaranteed and applying will put an inquiry on your credit. In addition, if you qualify for that card it is possible, probably even likely, that you will qualify for other credit cards, so don’t feel that you have to go with the one that sent you a special offer. The best credit card deal for you may be the best credit card onlinethat you find on your own, not one that was mailed to you.
In his weekly report on CNN, consumer advocate and rip-off preventer warns that it is important to avoid pre-approved credit card fraud. He mentions that this is really important in light of recent database hacking, like the 2013 hack of the Target credit card database. He suggests that if you are worried about receiving too many pre-screened offers in the mail, for example because someone might steel them and try to apply for the card, you can opt out of these offers. When it comes to how to stop credit card junk mailjust put your name in a database that directs that you are not to be send any “pre-qualified,” “pre-selected” or “pre-screened” offers. If you are interested you can opt out at OptOutPreScreen.com
Clark Howard. http://www.clarkhoward.com/videos/clark-howard/consumer-issues-id-theft/a-way-to-avoid-pre-approved-credit-card-fraud/vCRJyf/
Quicken Loans. http://www.quickenloans.com/blog/preapproval-vs-prequalification
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