TORONTO, ON / ACCESSWIRE / May 27, 2024 / Receiving an offer that you've prequalified or been preapproved for a credit card can be incredibly exciting. Many people use the two terms interchangeably, but in reality there can be differences depending on the credit card issuer. Understanding the difference between the two can help you to make an informed decision about whether to move ahead with the application process. Remember that being prequalified or preapproved doesn't guarantee you will be approved should you choose to apply for a credit card. Always make sure that you do your research to ensure you choose the right card for you-and can use it responsibly.
Prequalification: A Basic Look
When you're prequalified, the lender has typically done a soft check (also known as a soft inquiry) of your basic information via credit reports and has found that you meet the card's basic requirements, should you choose to apply for their credit card. Soft inquiries do not affect your credit rating or score.
There are benefits to being prequalified. It allows you to gauge potential offers, shop around for cards, and discover if you can apply for a card that you really want, all without negatively impacting your credit score. You could, for example, reach out to a credit issuer to find out whether you prequalify for a card, rather than applying outright and risking a hit on your credit rating.
Being prequalified does not guarantee approval of your application, which is important to keep in mind.
Preapproval: A Deeper Dive
Preapproval also means a lender has done a check on your credit rating. Usually, these are also soft checks, although some lenders may perform a hard check for pre-approval. Either way, a hard inquiry is done once you officially apply for a credit card. Hard checks do affect your credit rating and score, so it isn't recommended to apply for a bunch of credit cards in a short time frame.
The preapproval criteria are more in-depth than the criteria to become prequalified, because it is a step closer to approval. The issuer will look into your detailed financial information, credit history, and payment history. Some preapproved credit cards might come with an introductory interest rate. It's important to note the interest rate, how long it lasts for, and what the higher interest rate will be, as that can significantly add to your debt load.
Preapproval doesn't guarantee you'll be approved when you apply for the credit card, either, but it lets you know you are very likely to be approved-as long as your financial situation hasn't changed drastically since the offer was made.
Final thoughts on prequalified vs. preapproved
Just because you've been preapproved or have prequalified for a credit card doesn't mean you have to apply for it, or even that you should. A credit card should fit into your financial strategy, not the other way around, and it should make sense given your budget, your spending, and the rewards you'd like to take advantage of. Review each credit card's terms and conditions to make sure you fully understand what's being offered and can make a decision that makes financial sense for you.
CONTACT:
Sonakshi Murze
Manager
sonakshi.murze@iquanti.com
SOURCE: iQuanti
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