Does a Credit Card Pre-Approval Actually Guarantee Approval?

Have you ever wanted to know whether you’d be approved for a credit card before submitting an application?

A credit card pre-approval offer will give you a pretty good idea of whether or not you can pocket the card in question. That said, in most cases, an offer isn’t an automatic guarantee. Many issuers have policies in place that can tamper with pre-approval at any time – particularly if your financial health alters in any way during the offer period. 

With this in mind, you should always look at a credit card pre-approval offer as insight into whether or not you’d be approved, not a definite invitation.

For more details on whether or not a credit card pre-approval offer actually guarantees approval, plus more information on pre-approval offers in general, keep scrolling.

So, What are Pre-Approved Credit Card Offers?

Let’s start by assuming you’ve never heard of a pre-approved credit card offer before.

A pre-approved credit card offer signifies that there’s a high likelihood that you’ll be approved for a certain card based on the pre-screening of your creditworthiness. Your creditworthiness is generally based on factors like credit scores, reports and payment history.  

Pre-approved credit card offers come from financial institutions, typically those you already have an account with, or those associated with your go-to institution. 

Institutions extend these opportunities either straight to your inbox or by mail based on the intel they’ve gathered on your financial habits. From time to time, you might even see an offer present itself as a pop up on your online banking account. Regardless, if you have good credit that meets another card’s criteria from the same creditor, it’s likely that the lender will send you a pre-approved offer in hopes that you continue to do business with them.

In order for you to uphold your pre-approval offer, you will need to meet the terms of opening the account at the time of acceptance. These terms will be outlined in the offer, so make sure you read the fine print.

Some issuers will also require you to go through the application process for the credit card regardless of pre-approval, so, as we’ve said, nothing is ever set in stone.

The Difference Between Being ‘Pre-Approved’ vs. ‘Pre-Qualified’ for a Credit Card

When it comes to credit card pre-screening, a lot of loose terms get thrown around.

Some lenders might even lead with offer openers like “you’ve been pre-screened or pre-selected” rather than explicitly saying that you were pre-approved.

In this section, there’s another term that we want to distinguish from being pre-approved: enter pre-qualified.

While a pre-approval offer refers to when a financial institution has pre-screened your financial patterns to officially determine whether or not you’d be a good fit for a new card (if you continue to meet the terms and conditions of that card), pre-qualification involves the issuers reviewing your creditworthiness, but more so for an estimate of which cards you should consider applying for. 

Credit card pre-qualification is usually initiated by you, the customer, whereas pre-approval (as mentioned) is something automatically completed by the issuer.

Whether you’re dealing with pre-approval or pre-qualification, both pre-screening methods perform soft credit checks to assess your creditworthiness. Soft credit checks appear on your credit report but don't affect your credit score. A hard credit check only comes into play if and when you actually decide to apply for the credit card in question.

Credit card pre-qualification is actually a lot more common than credit card pre-approval. In fact, you should always be hesitant to give into a credit card pre-approval offer, as these may be part of a marketing strategy implemented by the creditor when, in reality, you don’t really need a new card at all.

When in doubt, always review the credit card your issuer is attempting to promote to see if it’s really worth your time and (in the case of more premium contenders with higher associated fees) your money.

Credit Card Pre-Approval vs. Alternative Loan Pre-Approval

When dealing with loans like mortgages or car loans, the difference between pre-qualification and pre-approval is even more distinct. 

Oftentimes, a borrower will need to be both pre-qualified and pre-approved before the lender decides whether or not to loan them money. 

For example, let's say you’re buying a car. As the buyer, you might start by looking into getting pre-qualified for a loan so that you have a better grasp of how much money you’ll potentially be able to borrow. If you then get pre-approved for a particular loan, you can make a more concrete offer to the car dealership.

When it comes to credit cards, this pre-approval process isn’t necessary, but can occur from time to time (or at your discretion when opting into credit card pre-qualification).

So, is a Pre-Approved Credit Card Worth it?

If you come to find that the credit card featured in your issuer pre-approval offer actually aligns with your financial lifestyle, then there are many benefits to going through with the offer, including:

• Building Credit: Another card means another opportunity to increase your creditworthiness, as long as you pay attention to your new billing cycle and pay off your balance on time.
• Diversifying Credit: Adding another credit card to your wallet can also help you build credit. When you have a variety of creditors reporting to the credit bureaus, it can positively impact your credit score.
• Credit Utilization Ratio: Opting into a pre-approved credit card can also help you increase your total available credit. This means that you can spend a bit more while still keeping your credit utilization ratio low (under 30%).
• Reward Programs and Perks: If the card on offer has a valuable rewards program that complements your spending habits and it’s packed with perks that you’ll actually use, then it’s a great investment.
  

At the same time, there are of course some potential downsides to saying yes to a credit card pre-approval offer without proper consideration, such as:

• Debt Susceptibility: Opening up another source of credit can make you feel like you have a ton of money at your fingertips. If you don’t manage your credit responsibly, you can start overspending which will inevitably cause credit card debt.
• High Interest Rates: Speaking of debt, if you happen to be pre-approved for a low-interest credit card to keep up with your balance, understand that many of these cards offer their lowest rates for a limited time, typically during a promotional period. After this promotional period, rates will rise. So, don’t let an enticing welcome bonus that’s charmingly highlighted by your pre-approval offer trick you into something short-lived.
• Hard Credit Inquiries: As previously stated, credit card applications call for hard credit checks which will show up on your credit report and can impact your credit score. While the impact of one hard inquiry here and there is usually minimal and worth it if you need a new card, you should never apply for a credit card without careful consideration, especially if you’re making multiple hard inquiries at once (this looks risky to lenders).

Conclusion

While credit card pre-approval can give you a better idea of whether or not you’ll be approved for a specific card, this impending approval isn’t guaranteed.

In many cases, you’ll still need to submit a credit card application regardless of your pre-approval offer. 

In order for your offer to remain credible, you’ll also have to keep your creditworthiness in line with the offer’s terms and conditions.

If you haven’t received a credit card pre-approval offer and you’re curious about whether or not you’d qualify for certain credit cards, you can always talk to your financer about credit card pre-qualification.

Accepting a credit card pre-approval offer can boost your credit health and your credit utilization ratio, all whilst diversifying your credit (which in turn can positively impact your credit score). The right card upgrade can also help you collect better rewards and perks that satisfy your spending patterns.

Still, you’ll want to be cautious about accepting just any credit card pre-approval offer as a new card can encourage you to overspend and accumulate debt, tease you with a promotional period that isn’t sustainable, or lead to an unnecessary hard inquiry if you’re not absolutely sure you need the card.