Are pre-approved credit cards really pre-approved?

Skoal Cat

I have very little credit, but unfortunately I have some bad marks on that very little credit, which means my credit score is not very good. I'm working on all of that bullshit, but as it stands I can't get approved for a credit card. I just got an offer in the mail for being pre-approved for a card and, well, I kind of need a credit card to build my credit.
Am I really pre-approved, or is this marketing bullshit and once they talk to me they'll reject me and in the process mar my credit even more?

Zeon

Call and ask? But generally yes they will send you a credit card. Whether or not its a secured (ie, you pay up front) credit card or not will depend. But yes if they sent you a mailer they are generally willing to give you a credit card of some type.

mehmehmeh

pre approved with an *, they haven't done any work in pre approving you, just bought a random list of names from somewhere. They may be willing to give you a card, but it might not be the same offer advertised in the mailing. You may end up with with a card with a much lower limit and much higher rate once they pull your credit report.

http://moremoney.blogs.money.cnn.com/2009/10/15/my-12-year-old-got-a-credit-card-offer/

http://www.bankrate.com/brm/news/cc/20040420a1.asp

http://www.goofball.com/news/joke_Dog_Issued_Credit_Card

Skoal Cat

I'm fine with that. I just need a card.

(note: No worries, will always pay the balance in full on time. Promise.)

WeirdNut

I actually just had a similar thing happen. I applied online for a Capitol One card and received one with $500 limit and 0% interest till February next year. My card was just declined on my third purchase(gas and chips, declined for cigs). They are requiring that I send copy of my license, proof of address, and my most recent pay stub to take the hold off the card. I didn't omit or inflate anything on my application, and I'm sure they are going to pull some business about lowering my limit, or raising my interest rate. So did my pre-approval not mean shit?

Satsumomo

I worked for Discover, we had 2 types of pre-approved cards, some were actually pre-approved and just waiting for the customer to say yes to it, because they had really good credit.

On the other hand, 90% of the pre-approved letters we sent out were just as MehMehMeh said, no actual history check or anything, just your name being taken from a list. We also could not inform this to the customer, even if they asked, but I think the letters they received from us had actual small print stating that it wasn't really pre-approved.

Septus

Yeah, one or two times I tried to apply to those offers, and were turned down for not having a sufficiently active credit history.

MushroomStick

My sister has been turned down on supposedly preapproved cards several times.

Skoal Cat

Goddamn it. Because getting that stupid little ding on my credit is exactly what people with poor credit need.

Septus

And this is where I suggest considering a secured credit card, in order to build up some history. The annual fee will suck, they may have shitass service(mine does), but when using it very carefully and sparingly, I think it's a worthwhile way to get on the path to better credit.

Feral

Skoal Cat wrote: »

I have very little credit, but unfortunately I have some bad marks on that very little credit, which means my credit score is not very good. I'm working on all of that bullshit, but as it stands I can't get approved for a credit card. I just got an offer in the mail for being pre-approved for a card and, well, I kind of need a credit card to build my credit.
Am I really pre-approved, or is this marketing bullshit and once they talk to me they'll reject me and in the process mar my credit even more?

Short answer: no, you are not really pre-approved.

But let's get a few facts straight here.

Being rejected for credit does not impact your score.

What does impact your score is a "hard pull." This is when somebody requests your credit report for the purpose of approving a new account. However, it's a very small effect (around 5 points) for a short period of time (6 months). Also, multiple hard pulls for similar accounts within a short space of time (1-2 weeks) can sometimes be lumped together for scoring purposes - that way you don't get unfairly penalized for shopping around for the best rate.

Anyway, usually what the lenders do is a "soft pull," which is a partial inquiry and doesn't affect your score. They use that for preapproval, but you still have to go through the application process.

The moral of this story? Don't apply for credit unless you need it - but if you do genuinely need it, don't just apply to the first preapproved credit card offer that comes to you doorstep. Go to all the major banks as well as where-ever your checking account is (hopefully a local credit union) and shop around for the best rate.

Jasconius

Low credit pre-approved credit cards often come with a high initial fee and a cruelly high interest rate.

I just got one the other day that was pre-approved... with a 30% APR and a 175 dollar (!!!) upfront fee on a 700 dollar credit line.


ALWAYS check the rate, always check the fees. With low credit in this economy you're not going to get a great card, but you can still absolutely shop around.

DivideByZero

WeirdNut wrote: »

I actually just had a similar thing happen. I applied online for a Capitol One card and received one with $500 limit and 0% interest till February next year. My card was just declined on my third purchase(gas and chips, declined for cigs). They are requiring that I send copy of my license, proof of address, and my most recent pay stub to take the hold off the card. I didn't omit or inflate anything on my application, and I'm sure they are going to pull some business about lowering my limit, or raising my interest rate. So did my pre-approval not mean shit?

How much gas did you buy, and did you pay at the pump? Gas stations (similarly to hotels) are known to put humongous holds on your account. You swipe your card, the machine doesn't know if you're topping off a moped or filling up a Hummer, so it pre-authorizes $200.00 or so just in case. It usually doesn't hurt or even get noticed except in your case, when the consumer has a very low credit limit.

Noobexmachina

Pre-approved cards generally have some sort of annual fee and/or high interest rates. It's just another thing that keeps poor people poor, like paycheck advance places and rent to own. On top of that, applying for credit cards, even pre-approved ones hurts your credit even more.

With all that said, if you have no other cards, it may be your only choice to get a credit card and start rebuilding credit. Just make sure you don't carry a balance and pay it off every month.