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What Should You do with Pre-Approved Card Credit Offers?

By Philip Tirone

Thousands of pre-approved credit card offers arrive in the mail daily. Prime and sub-prime lenders mail these offers to increase their customer base and it works! Many people accept the offers they receive in the mail.

If you are like most people, you have also received several pre-approved card credit offers in the mail advertising low interest rates, an amazing new credit limit, or other special benefits. You might be wondering how these offers will impact your credit score and whether they are a good deal.

Before accepting these unsolicited pre-approved credit cards, consider the following facts:

Fact Number One

Don’t be deceived! Pre-approved does not mean you will receive the credit card and all the benefits it comes with. This is a fishing expedition. You were selected because your name appeared on a list of consumers that the credit card company purchased from credit-scoring bureaus who meet their minimum credit standards for the card. If you are the recipient of one of these pre-approved offers, you may see the words “promotional” and “pre-approved” listed on your credit report. Some people may apply for the credit card simply because they were pre-approved. What they don’t understand is that a pre-approved credit card does not mean they will receive the credit card. Read the fine print. It explains that final approval is based on the information in your credit application.

Fact Number Two

Pre-approved card offers do not affect your credit score because they are a soft inquiry on your credit report. However, this soft inquiry turns into a hard inquiry when you apply for the credit card because the credit card company must then pull your credit report and do a real credit check. This results in a slight dip in your credit score. Remember that 10 percent of your credit score consists of the number of hard inquiries on your credit report.

Fact Number Three

Always, always, always read the fine print before accepting a pre-approved offer. The large words on the offer are to capture your interest and entice you to accept the card. This is a sales pitch. Most sales pitches are for people with excellent credit scores, not for those who meet the minimum requirements. Fight the temptation of zero interest rate for a year on new purchases because you may not qualify for that perk or any of the other perks. A gifted sales writer knows how to entice and persuade with words. Know your credit score! This is the only way you’ll know if you can qualify for all the card promises.

Fact Number Four

Avoid adding more credit cards if you plan to make a large purchase, usually a home or a car, within a year. Why? Because a new credit card can negatively impact your credit score in the following ways.  First, your credit score will decrease because of the hard inquiry made by the credit card company when they pull your credit report. Additionally, a new credit card account will reduce the longevity of your credit accounts. 15 percent of your credit score is determined by the age of your credit accounts. Old age means a better credit score. Finally, if the new card exceeds the 3-5 credit card limit, you’ll have too many credit cards and your credit score may drop.

Fact Number Five

Identity thieves love pre-approved credit card offers.  They don’t care if you meet the minimum requirements. All they care about is intercepting your mail and opening a credit card in your name. This may lead to your credit being severely tarnished. You will no longer worry about your credit score, too many credit checks, or applying for more credit. Identity theft will cause you to focus on repairing the damage the thief does to your account.

To avoid this threat, opt out of all pre-approved credit card offers. To opt out, send a letter to the credit scoring bureaus and ask to be removed from their lists or you can call (888) 567-8688 and ask to be removed from all credit card offers.

Note:  Always review your credit report to protect yourself from identity theft.

A final note about pre-approved card credit offers:  If you really want to apply for a pre-approved credit card, search for a credit card which accepts consumers with your FICO credit score. To get your true FICO score, go to www.720FICOscore.com. Select the card which meets your needs. Avoid signing up for the first offer you find. Compare the credit card offers to get the best credit card for you. Just because something arrives at your door doesn’t mean you should put it in your wallet. Shop around! Make wise decisions!

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