Applying for a credit card is exciting, whether it's your very first card or one that comes with tons of enticing rewards. Regardless of the card you're considering, you could be feeling a little insecure about applying. If it's your first card, it could be daunting—you may have an array of questions such as "will I get approved?" and "what will my rates be?" If you're applying for an exclusive card with lots of pre-requisites, you may be wondering if you've demonstrated the necessary level of creditworthiness to be eligible.
Going through the pre-approval process can assist you with answering some of these questions in addition to increasing your chances of receiving the credit card you want. Pre-approvals offer more than just what is stated in its name. They can also:
- Allow you to compare rates and rewards against other cards
- Review your options in more detail without having it affect your credit score
- Potentially get you better rates
Knowing all the benefits that come with getting pre-approved for a credit card, you may be wondering:
- How do pre-approvals work?
- What steps should I take before going through the pre-approval process?
- Does getting pre-approved hurt my credit score?
- Do pre-approved offers run a hard inquiry?
Let's address these questions below.
How do pre-approvals work for credit cards?
To help provide the issuer with insights about you and your credit, the pre-approval process may include a soft credit check (or a soft inquiry). A soft inquiry run by an issuer allows them to see basic information like your credit score and how often you open up credit card accounts. This kind of inquiry will not affect your credit score but may appear on your credit report.
Now that you know that soft inquiries are part of the pre-approval process, let's discuss ways that you can put yourself in good standing so you can increase your chances of pre-approval.
Steps to take before getting pre-approved
To help solidify your chances of getting pre-approved, you may want to take a few steps. Note that the following can help increase your credit score, and a higher credit score can provide a positive reflection of your creditworthiness and your financial responsibility.
Step 1: Request a credit report
The first step is to know where you stand with your credit. You can get your free credit report from one of the three credit bureaus— Experian™, Equifax® or TransUnion®. You can also receive your free credit score and your Experian credit report when you enroll in Chase Credit Journey® regardless of whether you bank with Chase or not. You'll also get information about what your score means and how to quickly boost your score.
Having this information on hand helps examine your credit up close and determine if you're an ideal candidate for pre-approval. If you find that your score is not quite as high as you'd like it to be, don't worry—the next few steps will help you get to where you need to be.
Step 2: Dispute any errors on your credit report
It's quite possible that while you're reviewing your credit report you'll find an error. Perhaps there's a charge you don't recognize, or someone may have used your information to pay for something without you realizing it. With a little diligence, you can get these errors removed from your credit report, which could reflect positively in your score. Keep in mind that credit scores generally get updated once every month—however, with Chase Credit Journey, you can get an updated score every 7 days if you check frequently.
To do this, contact the credit bureau(s) that issued your report and describe your situation in detail. This can be done either online or over the phone. If you believe your account information was stolen, be sure to also contact your issuer to freeze any accounts that are at risk and avoid future errors.
Step 3: Lower your credit utilization ratio
Your credit utilization ratio is a key component in generating your credit score. It accounts for about 20% of your VantageScore® and 30% of your FICO® score. This ratio refers to the proportion of your credit card balances to your credit limit. Paying off your balances can help lower your ratio and make you a more appealing candidate for pre-approval.
Step 4: Make timely payments and maximize your income
Your credit score is heavily impacted by your payment history, which represents your ability to make credit card payments on time and in full. If you are consistent and vigilant about paying your bills on time, your credit score will improve over time.
Of course, it's much easier to pay these bills if you have the appropriate funds. Take a look at your credit card statements and your accounts—dissect your account activity and find ways to cut costs from things like takeout, coffee or subscriptions you rarely use. The little things will add up!
Does getting pre-approved hurt your credit score?
Getting pre-approved does not hurt your credit score. As we discussed earlier, a pre-approval may require running a soft inquiry, which, unlike a hard inquiry, does not hurt your credit score.
Do pre-approved offers require a hard inquiry?
No—they may involve a soft inquiry, which won't affect your credit score. The offer itself doesn't generate a hard inquiry, so don't worry—just because you have the offer doesn't mean you've hurt your score.
Are there benefits to being pre-approved?
Going through the pre-approval process for a credit card allows you to:
- Compare annual percentage rates (APRs) and minimum payments
- Improve chances of getting the card of your choice
- Potentially receive lower APRs, which will help you save money in the long run
If you've been pre-approved for a credit card, you should feel excited and encouraged that you're on the right track with your credit journey. The more you take active steps towards improving and protecting your credit score, the more opportunities you may unlock—from more exclusive cards to lower interest rates.