Many of you might get emails and notifications saying, Your credit card is pre-approved. But, do you know what such emails mean? Should you respond to such offers immediately or totally ignore them? Before you take any steps in a rush, let’s understand what a pre-approved credit card means.
What does pre-approval mean?
Credit card companies and banks always plan different ways to increase their customer base. Pre-approved credit cards are one such tactic used by most credit card companies. Credit card issuers often send out emails or letters to prospective customers labelled as pre-approved applications. Before sending out such emails, the issuer will first do a basic screening process to see if you have a fair credit score. If you meet the criteria, your name will be on their mailing list. If you receive such mails, think of this as an invitation and not an approval for the same.
It’s a fact that such deals can be tempting, but as a user, you should be very smart on how to react to such marketing strategies. So, first things first, you should ensure to read all the terms and conditions carefully before applying. Understand their T&Cs well before taking any action!
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Does applying for a pre-approved credit card hurt your credit score?
If you choose to respond, you can follow the process given in the mail. But, note that when a credit card issuer sends you an email or letter saying you are pre-approved for a credit card, it does really mean you will get the card as soon as you respond. When you apply, a level of inquiry will be conducted on your credit profile in order to assess your creditworthiness. The issuer will further judge you based on your current income, credit history, number of credit accounts, etc. So, until you apply, the credit card issuer will not be able to access your credit history.
In case the issuer thinks you are not creditworthy, your application may get rejected. And, a credit card rejection might also bring your credit score down.
Related Reads: The Difference Between a Debit Card and a Credit Card
Be aware of red flags
The mail sent to you had been designed and strategized to gain your attention. So, as a smart user, you must watch out for some red flags
- Lifetime free premium credit cards
- Low-interest credit cards
- Free Add-On cards
- Expensive joining gifts
How to apply for pre-approved credit cards?
After reading the terms & conditions, you would need to submit documents as mentioned by the issuer. The documents generally are:
- Proof of Identity
- Proof of Residence
- Income Proof
- Copy of PAN
Once the issuer gets your application, they will look at your credit score, income and repayment criteria to make the final decision.
So, the final call is yours. You can respond to a request for pre-approved credit cards, or you can apply via the normal route. In both cases, your application will be treated like any other normal application. The issuer will make a hard inquiry on your credit score and credit report to check your creditworthiness. Ideally, it is suggested to apply for a credit card when you are really in need or you feel you are responsible enough to pay credit card dues on time.
You can avail your free annual CRIF credit report to check if your score is good enough for approval.