Credit cards have become indispensable in today’s world when you have several financial obligations. A credit card can be a helpful option whenever you face a cash crunch. Due to the extensive use of credit cards, many credit card issuers are in the market. They launch attractive offers, special rates, discounts, etc., to attract customers. The fierce competition between the credit card companies necessitates them to innovate new ways and techniques to lure credit card purchasers. One of the new launches that have become very popular is – the “Pre-Approved Credit Card.”
Have you also received phone calls or emails asking you to avail pre-approved credit card? Well, pre-approved credit cards have been appealing to many earning individuals. Do you know what is a pre-approved credit card and whether you need it? Let us explore the dynamics of a pre-approved credit card!
What are Pre-Approved Credit Cards?
Pre-approved credit cards are offered by banks or credit card companies, where you get an auto-approved credit card without applying for it. The card issuer sends invitations to certain individuals with whom they may have an existing financial relationship. These companies or banks do not wait for you to apply for a credit card and pre-approve you in advance. This way, the companies or banks get a larger pool of customer base and you also get a credit card without needing to apply for one. You don’t need to share your income documents, bank statements, etc. for getting the credit card.
However, you must still complete the application process like other applicants and wait for the final approval to get a pre-approved credit card.
How Can You Get Pre-Approved Credit Cards?
The banks or credit card issuers find a list of existing customers eligible for a credit card based on certain factors. One of the main checks is your repayment behaviour on the existing loan with the lender and your credit score. The credit card companies have access to your credit score. Based on the same, they check the eligibility of the candidates for pre-approved credit cards. If the banks and credit card issuers find your credit score ((CIBIL, Experian or CRIF) within the acceptable range, they send you the pre-approved credit card offer.
Once you get a mail or phone call stating that you are qualified for a pre-approved credit card, you can accept the offer and complete the process. As mentioned earlier, you must complete the application process for getting a pre-approved credit card. The bank or company will validate your application and approve your credit card. Sometimes, when you may be pre-approved for a credit card, there are still chances that your credit card application may not be approved. In case you face difficulty, contact DueFactory, your credit repair partner!
To check if you have any pre-approved offers, you can visit the app or website of your primary banking partner. Go to the pre-approved loan section and check if there are any offers for you. You need to send the application to apply for the credit card online. The concerned bank will pull your credit score, conduct a few verification checks, and if they find every detail matching their set criteria, your credit card or loan application will be approved.
Pre-approved Credit Cards: Top Things To Know
Here are some of the facts about pre-approved credit cards you must know:
- If your pre-approved credit card application gets denied, your credit bureau score will be lowered temporarily.
- Pre-approved credit cards may be offered as a lifetime-free and interest-free credit cards. However, they may still charge you certain interest and have limited validity. You must read the terms and conditions mentioned in your credit card agreement carefully.
- Pre-approved credit card offers may have an expiration date. Ensure to apply for it within the specified period.
- These credit cards involve soft credit checks on credit report.
- You have no obligation to accept a pre-approved credit card.
Pre-approved Credit Cards: Top Benefits
Here is why applying for pre-approved credit cards makes sense:
1. Special Bonuses and Rewards
Pre-approved credit cards come with special bonuses and rewards. When you apply for a card, you might get a welcome bonus, extra reward points, discounts, shopping vouchers, and other perks. Read all the terms and conditions before applying for one.
2. Quick and Convenient Application Method
Applying for a pre-approved credit card is quicker and more convenient. Also, when you get an offer, you always have a choice of whether you want to apply for it or reject it. You don’t have to spend too much time and effort comparing various credit card offers or sending multiple applications.
3. Minimal Paperwork
This type of credit card needs minimal documentation for approval. Most of the time, the initial analysis has been done by the bank or credit card company.
4. Less Processing Time
It takes a little time to perform checks and eligibility matching for the pre-approved credit card since the issuer already has most details about the applicant.
5. Credit Building Opportunity
You can build your score if you qualify for a pre-approved credit card. You get credit card approval depending on your income, age, credit health, debts, etc. After getting approval, you must use the card responsibly and start credit building for credit improvement. Connect with DueFactory and know great credit building insights.
6. Competitive Interest Rate
Most banks and financial institutions offer competitive interest rates on pre-approved credit cards to attract customers. The interest rate of pre-approved credit cards is often lower than standard credit cards.
When Should You Get Pre-Approved Credit Cards?
If you are confused about whether you should take pre-approved credit card or kick it, consider these points:
- Pre-approved credit cards are based on your credit bureau score. To qualify for the proposed pre-approved credit card, you must match the eligibility norms, like having good financial wellbeing, a positive debt-to-income ratio, a good loan repayment track record, etc. You can apply for the pre-approved Credit Card if you match these eligibility requirements.
- Determine whether you need a pre-approved credit card or not. While the attractive offers and convenience may excite you, get one only if you can manage the same cautiously.
- Check affordability. Be informed that even the pre-approved credit card incurs interest and charges other fees. Consider these charges and determine whether you can afford a credit card.
Wrapping up
It would help if you looked forward to boosting your credit score to improve your eligibility and get a pre-approved credit card. Make regular credit card payments, lower the amount of used credit, pay off debts, etc. You can also seek assistance from DueFactory, your credit repair partner, to support yourself in your credit journey and get important credit insights.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
FAQs
1. What is a pre-approved credit card?
Ans. The banks and credit card providers automatically send pre-approved credit cards to customers without them applying for one.
2. When should I get a pre-approved credit card?
Ans. If you can make timely repayments and afford the interest and other fees associated with the credit card, you can work towards being eligible for preapproved offers from the banks you have a banking or a loan relationship with.
3. Can a pre-approved credit card negatively impact my credit score?
Ans. Yes. Your credit score will be impacted if your final credit card approval gets rejected or you do not repay the outstanding amount on time.
4. Should I apply for a pre-approved credit card?
Ans. Before applying for a pre-approved credit card, assess your financial requirements, monitor your credit, check whether you need a credit card, and understand the card’s terms and conditions. If you have a bad score or have recently been rejected, you should avoid applying for any pre-approved offers and first resolve your credit issues with the help of Due Factory.
5. How to apply for a pre-approved credit card?
Ans. To apply for a pre-approved credit card, fill out the application form given by the lender making the offer. The issuer will complete all the relevant checks. After verification, the credit card will be issued to you.