Do Pre-Approved Credit Cards Affect Credit Score?

Pre-approved credit card offers are common, prompting questions about their effect on financial standing. These offers signal a potential fit between a consumer’s credit profile and a lender’s criteria. Understanding how these offers interact with credit scores is important for anyone considering new credit. This article clarifies the distinction between receiving a pre-approved offer and applying for credit, detailing credit score implications at each stage.

Understanding Pre-Approved Credit Card Offers

A pre-approved or pre-qualified credit card offer indicates that a credit card issuer has conducted a preliminary review of a consumer’s credit information. This initial assessment means the consumer has met certain basic eligibility standards set by the lender. These offers are not a guarantee of approval, but rather an invitation to apply, suggesting a high likelihood of acceptance if the consumer proceeds and continues to meet the terms.

The process behind these offers involves a “soft inquiry,” also known as a soft pull, on a consumer’s credit report. A soft inquiry occurs when a credit grantor or the individual themselves checks a credit report without it being tied to a new application for credit. This type of inquiry does not affect a credit score and is not visible to other lenders. Consumers receive these offers through physical mail, email, or online pre-qualification tools.

The Credit Score Impact of Applying

While receiving a pre-approved offer itself does not impact a credit score, formally applying for the credit card will result in a “hard inquiry,” also known as a hard pull. A hard inquiry is a formal request by a lender to access a consumer’s full credit report and score when a new credit application is submitted. This type of inquiry is recorded on the credit report and can be seen by other lenders.

A single hard inquiry causes a small, temporary dip in a credit score, by fewer than five points. The impact is minimal and temporary, with the score rebounding within a few months, assuming other credit behaviors remain positive. A hard inquiry remains on a credit report for up to two years, but its effect on credit scores lessens after 12 months. Applying for multiple credit cards within a short timeframe can lead to several hard inquiries, which may have a more noticeable negative effect on a credit score, signaling increased credit risk to lenders.