Pre-Selected vs Pre-Approved Credit Offers: What’s the Difference?
These days, you could be getting mail every day proclaiming that you have been pre-approved or pre-selected for a credit card, tempting you to “Act Now!” While these “Act Now!” invitations often feel like a guaranteed win, they frequently leave consumers wondering why they were targeted, whether responding will hurt their credit score or if the offer is even legitimate.
In reality, lenders use terms like “pre-qualified” and “pre-approved” to market their products with subtle but crucial distinctions that impact your chances of final approval and your standing with credit bureaus. Our goal is to break down these labels, explain what these pre-selected vs. pre-approved offers mean, and, most importantly, what that means for your credit score.
What are Pre-Selected Offers?
The term “Pre-Selected” or “Pre-Screened” is typically the most generalized marketing effort a lender will make. The financial institution works with credit bureaus to purchase a list of consumers who meet broad, high-level criteria, such as having a credit score above a certain threshold or living in a specific geographic area.
For example, a credit card company might screen for individuals who have a FICO score above 700 and no bankruptcies in the last two years. The credit check performed to generate these lists is almost always a soft credit inquiry, which, as we’ve discussed, does not impact your credit score. Because the review is so high-level, these offers come with absolutely no guarantee of approval. Think of these mailers as a mere “invitation to apply.”
What Does Pre-Approved Mean?
Oftentimes, people wonder if their credit has been checked prior to receiving a credit offer. It’s a valid thought; after all, how can these companies determine that you’re pre-approved without checking your credit first?
Some financial institutions purchase lists from credit reporting agencies, providing them with a rough idea of where people stand on the credit score spectrum. Then lenders perform a soft inquiry, which allows them to review your basic credit history and determine if you are a strong candidate for their products without ever impacting your credit score. In fact, your credit won’t be pulled until you actively apply for the credit card or loan in question.
Think of pre-approval as a “good-faith offer” that is still contingent or dependent upon the results of a hard credit inquiry. Financial institutions want you to be approved, so they market to those who best fit their requirements for approval.
What are Pre-Qualified Offers?
The term “Pre-Qualified” typically refers to a process that you usually initiate yourself. You might visit a credit card’s website and fill out a quick online form providing basic details like your income, debt, and housing payment.
The lender then performs a quick review, usually with a soft credit inquiry, to give you an estimate of the products, interest rates, and credit limits you might qualify for. Because this review uses more self-reported data than a general “pre-selected” offer, it provides a clearer picture of where you stand. The primary benefit of pre-qualification is that it allows you to rate shop and compare potential terms across multiple lenders without ever risking damage to your credit score.
How Are Pre-Selected, Pre-Qualified, And Pre-Screened Different?
Many credit issuers use these terms interchangeably. With pre-selected, pre-qualified, or pre-screened offers, even less information about your specific credit is known to the issuer.
For example, they may obtain information on individuals with a credit score of 650 or higher within a certain demographic area. A person may make that list, but nothing more is known about their financial status, such as their income-to-debt ratio or credit history. This is a much broader way to market to potential customers.
Alternatively, though, if a person doesn’t quite meet that financial institution’s criteria, they could still be approved, but with less-than-appealing terms. This could include higher interest rates or restrictive credit limits.
The credit offer letter might show an attractive interest rate; however, the interest rate you actually get will depend on your credit score. Therefore, it’s best to know your credit score so you don’t end up applying for credit that you ultimately might not be approved for after reviewing your bigger credit picture.
Does Pre-Approval Affect My Credit Score?
Preapproval is when a lender or creditor determines you meet specific criteria that make you a strong candidate for a loan or credit card. It’s important to keep in mind, though, that it doesn’t guarantee final approval.
Depending on the situation, the preapproval process may involve pulling your credit using a soft inquiry or a hard inquiry, which can have an impact on your credit scores.
What’s the Difference Between a Soft Credit Check vs. Hard Credit Check?
When people talk about credit options, you’ll hear the terms soft credit check and hard credit check mentioned. While they sound similar, knowing the difference between them is important because one is a “behind-the-scenes” glance at your history, while the other can directly impact your credit score and your ability to secure loans.
Soft Credit Check
A soft credit check, or a soft inquiry, is when you or a non-lending entity checks your credit file for informational purposes. The key is that a soft inquiry is not tied to an application for a specific new loan, so soft inquiries don’t affect your credit score.
Soft credit scores aren’t always requested by the consumer. Potential employers and landlords can view a soft credit inquiry with the permission of the applicant. They may not appear when lenders check your credit report, but they’re always visible when you check your own report.
Hard Inquiry
Hard credit checks, also called hard pulls or hard inquiries, occur when you authorize a lender to review your credit reports as part of a loan or credit application process. During a hard inquiry, they can view your full credit report, which includes personal details, employment history, information about your current and past credit accounts, balances, payment history, and even other recent hard inquiries you’ve made with other lenders.
Applying for multiple loans or credit cards within a short timeframe may signal financial distress or difficulty managing expenses without taking on debt, which increases the perceived risk of missed payments. While a hard inquiry remains on your credit report for two years from the date it occurred, it only actively impacts your credit score for the first year.
Can I Opt Out Of Pre-Approved Credit Card Offers?
Yes! Just as there is a “do not call” list for telemarketers, there is a “do not send” list for credit offers. There are two ways to opt out of receiving pre-approved cards:
- Online: Follow these easy instructions to opt out of pre-approved credit offers.
- Phone: Call toll-free: 1-888-567-8688 (1-888-5-OPTOUT)
You have three options available to you when contacting Opt-Out Prescreen:
- You may choose to opt out of receiving firm credit card offers for 5 years
- You may choose to opt out of receiving firm credit card offers permanently
- You may choose to opt back in and be eligible to receive firm offers once again
Remember, when you decide to opt out, you’ll have to provide personal information such as:
- Your name
- Your home phone number
- Your social security number
- Your date of birth
This information is completely confidential and is only used to process your request to opt out.
Navigating Your Credit Options at Diamond Credit Union
In short, “pre-selected” is a marketing invite, “pre-qualified” is a research tool you start, and “pre-approved” is a strong handshake from the lender. All three use soft credit checks to protect your score, but nothing is officially finished until you submit your formal application.
However, with a VISA ® Diamond Credit Card, you don’t need to wait for a special offer. Our team is ready to answer any questions you have and start applying today.