When a lender thinks that you are a good candidate for a pre-approved credit card he offers you one based on the information in your credit report. But, the catch here is that though you may receive a pre-approved credit card offer, it doesn’t mean you are guaranteed to receive the card.
Pre-approved offers are sometimes referred to as "prescreened". You would still have to go through the regular process of applying for the credit card, even though you are said to be pre-approved.
But can these pre approved credit cards hurt your credit?
Before a pre approved credit card is offered by a lender they make a soft inquiry which will not affect your credit. But if you accept this pre approved credit card then the lender will make a hard inquiry that could temporarily hit your credit score by a few points. That is why financial experts stress on fully reading and understanding the terms and conditions of any contract or services being offered before accepting them.
Checklist before accepting a pre approved credit card:
- Check for any annual fee, interest rates offered and rewards included (if any).
- How user-friendly is the card issuer’s website or app is.
- Availability of automatic payment system to avoid late payment fee and interest charges.
- Read reviews of other customers. This will help you give a proper insight on the card issued by the lender.