Every year there are countless offers that appear in people’s mailboxes. Some look great but not all of them should be considered. The latest craze in the loan industry is offered by preapproved credit cards. At first glance they look great, so this is why so many take advantage of the opportunity. However, just as with everything in the industry, be sure you learn all that you can about preapproved credit cards before making your final decision, including the following.

Preapproval Lists Are Based On Credit Bureau Reports

It is possible for a person to qualify for the preapproved credit card offered by a company that person never worked with as the firms actually get information from the large industry reporting agencies.

Even if there are limits about who can get information about your credit, the lenders and the insurance companies do manage to access credit reports when they make a commitment to offer a product (in this case the preapproved card). Basically, after a prescreening, an agency sends preapproved offers.

Being Preapproved Does Not Mean You Cannot Be Rejected

The preapproval process does not actually mean you are going to automatically receive a deal and take advantage of the credit. A person can be rejected. The big problem is that the term “preapproved” is not actually regulated so the lender can decide what it actually means.

You should look at the preapproval as being an offer. Applying for the new credit card is still needed for the final approval to come in. This really means you are offered an invitation to apply for the card, even though the agency makes it appear there is a good possibility of being accepted.

Preapproval Does Not Have An Impact On Credit Score

The fact that you are offered a preapproved credit card has absolutely zero impact on your credit score but in the event you do agree to the offer, you are impacted. The lender just checks credit after you accept the offer.

This is really important because when you accept the offer, a hard inquiry will be made by the agency. The results of the inquiry do remain on your record for up to 2 years and your credit score can go down by a small amount. Be sure to carefully choose any credit card offer you accept.

Different Rates May Be Offered

After you decide to accept the preapproved offer, the application is sent. As noted before, the lender will now actually check your credit history and score. Even if you are approved, the rates and terms they offer will not necessarily be the ones presented in the preapproval letter. When you have a credit score lower than the information initially received by the agency, your rates are likely to be higher.

You want to try to be 100% sure that you navigate the market properly, and that you choose the best deals.