Are you staying away from credit cards because you fear rejection? You can check whether you qualify for a credit card without further affecting your credit score. Some banks allow you to check whether you pre-qualify for credit cards before you decide to apply.
The information you need to fill in includes your name and address, as well as the last four digits of your social security number. Your credit score will not be affected by using this service which is great if it is already bad.
What Does Pre-qualification Mean?
This service utilizes a soft credit check, meaning that it will not be recorded in your report. A bank can also create a pre-qualified list by purchasing marketing lists each month from a credit bureau. If you meet its lending criteria, the bank will buy your name.
A soft inquiry will give the bank some basic information about you, including your credit score. Based on the information provided by the credit bureau, the lending institution can determine whether you will pre-qualify for a credit card. Many pre approved credit card offers exist; it is just a matter of finding the right one for your needs.
If you are not pre-qualified, it does not necessarily mean that your credit card application will be rejected. You might get an approval when the bank pulls your full credit report. On the other hand, pre-qualification does not mean that your credit card application will be approved either. It still might get rejected.
Why would you be rejected after being pre-qualified?
– When your full credit report is pulled, the bank will obtain additional data. This means that the additional data could hurt your chances of getting a credit card.
– When you complete a credit card application, you have to provide more information, including your salary and employment. If your salary is too low or you are unemployed, your application can be rejected.
– Your information can change between the soft inquiry and your credit card application. This means that even if you pre-qualified a week ago, missing a payment will change your data.
The bank uses the most recent information to make decisions.
Consider a Personal Loan
When you opt for a personal loan, there will be no hard inquiry and your rates will be lower. A number of internet-based personal loan companies will let you see whether you are approved by doing a soft credit check. Personal loans have a lower interest rate than a business credit card.
To check whether you qualify for a loan, you can use several online tools.
Applying Without a Pre-qualification
One hard credit inquiry will take at least 5-10 points off your credit. You should pay your bills on time and keep your debts at a manageable level if you want to have a hard credit score conducted. The only way to know whether you will be given a credit card is by applying.
Pros of Pre-qualified Credit Cards
When you get pre-qualified for a credit card, the more likely you are to get the best offer. After all, pre-qualification is a marketing tactic that lenders use to get you on board.
As soon as you start the credit card application process, lenders will perform a hard credit check on your report. Although this is ok when done occasionally, it will negatively affect your score when frequently done. However, with a pre-qualified credit card, the lender has already done a soft credit check, which does not affect your credit score at all.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.