What Is a Prescreened Offer for Credit?
Understand prescreened credit offers: their purpose, how they're generated, and your options for managing or stopping them.
A prescreened offer for credit is a solicitation from lenders to consumers. These offers are not random, but based on specific criteria indicating a consumer may be a suitable candidate for a financial product. Lenders identify individuals whose financial profiles align with requirements for a credit offering, such as a credit card or loan. This initial screening allows lenders to target marketing efforts more effectively, presenting tailored opportunities to potential customers.
Understanding Prescreened Offers
Prescreened offers are also known as “firm offers of credit” under the Fair Credit Reporting Act (FCRA). A firm offer of credit means the lender intends to grant credit if the consumer meets the specified criteria. The offer is binding, provided the consumer continues to satisfy the initial selection conditions.
While it suggests a strong likelihood of approval, it does not guarantee credit without a formal application and verification. Receiving a prescreened offer does not negatively impact a consumer’s credit score. The inquiries made by lenders for prescreening are “soft inquiries,” visible only to the consumer and do not affect their credit standing.
How Your Information Is Used
Lenders obtain consumer information for prescreened offers primarily through nationwide credit bureaus like Experian, Equifax, and TransUnion. These bureaus maintain vast databases of consumer credit information. Lenders provide specific criteria to the credit bureaus, which then generate lists of consumers meeting those standards.
This information exchange is permissible under the Fair Credit Reporting Act. Lenders do not receive a consumer’s full credit report at this preliminary stage. Instead, they receive names and addresses of individuals matching their desired credit profile, based on factors like credit score ranges, geographic location, or credit utilization.
Responding to Offers
Upon receiving a prescreened offer, consumers can accept or decline it. If accepted, a formal application process follows, often involving submission of additional personal and financial information for verification. During this stage, the lender usually performs a “hard inquiry” on the consumer’s credit report to assess creditworthiness. A hard inquiry can cause a slight, temporary dip in a credit score, unlike the soft inquiry used for prescreening. Consumers should carefully review all terms and conditions, including interest rates, fees, and credit limits, before accepting any offer.
Stopping Unwanted Offers
Consumers can stop receiving prescreened offers through an official opt-out process. This centralized service is managed by the major credit bureaus via OptOutPrescreen.com. The platform allows individuals to opt out for five years or request a permanent opt-out.
A five-year opt-out can be completed electronically on the website. A permanent opt-out requires initiating the request online and mailing a signed Permanent Opt-Out Election form.
To complete the opt-out, consumers provide personal information for verification, including their name, current address, Social Security number, and date of birth. Providing the Social Security number helps ensure the request is successfully applied to the correct credit file. Opting out is a right protected under the Fair Credit Reporting Act.