Here’s how ‘pre-approved’ credit cards work and how to opt-out…
If you feel like you’re constantly being barraged with credit card solicitations, you’re not alone! Credit card issuers spend millions of dollars to make sure you get the message. Whether by mail, online or by phone, it’s almost impossible to avoid pre-qualified, pre-screened and pre-approved credit card offers. But what does “pre-approved” really mean and should you take the bait?
If you’re receiving pre-screened, pre-qualified or pre-approved credit card offers, you’re probably doing a good job of managing your finances. Since pre-qualifications are based upon your credit score, it’s a good sign you’re receiving these solicitations – even it gets annoying. If you’re in the market for a new credit card, these types of offers can be valuable way of comparing the costs and benefits of other credit cards and may assist you in choosing the best deal. The terms may also be more favorable than those offered to the general public and may only be available through the pre-screening process.
Whether you like it or not, credit card companies have direct access to the credit bureaus and contact them before pre-selecting you to receive an offer. Even though the inquires are recorded on your credit report, they have no impact on your credit score and you’ll only be turned down under limited circumstances with one of these offers.
Pre-screened, pre-qualified and pre-approved credit card solicitations all reflect the same determination made by the credit card companies - that you’re at low risk to default on your credit card debt. They look to identify responsible consumers and those who meet specific criteria set for the various products they have to offer. Consumer information is gathered during the pre-screening process in the following ways:
- One of the three credit reporting agencies provides a credit card company a list of consumers who meet specific criteria
- A credit issuer provides a list of potential customers to one of the three credit reporting agencies, asking them to identify people on the list who meet their criteria.
If you’re interested in reducing the number of unsolicited credit card offers you receive, you can opt out of receiving pre-screened / pre-approved credit card offers for five years or permanently. Call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit www.optoutprescreen.com for details. Be prepared to supply your personal information including SSN and birth date. Opting out will not stop standard, non-screened offers and removing your name from pre-screened lists has no effect on your ability to apply for or obtain credit.