Question
Recently I receved a "Pre-Approved" credit card application. It promised me a bonus of 16,000 United Mileage Plus miles. I was just curius, are credit checks performed on such applications? I assume they are. Therefore, I was thinking that if I am to have a credit backgound check, then I might as well apply for a card offering at least 20,000 miles. Does anyone have any thoughts or information about these Pre-Approved applications? Thank you for your help and information.
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The pre-approved credit apps are sent out using a promotional credit score (not a hit on your credit), if you apply, then they will do a "regular" credit inquiry.
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Pre approved usually means nothing.
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Actually it could be tricky. They could pre approve you for a very minimal $500 type of credit line.
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Read the fine print and it will tell you that you still have to go through the standard application process.
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It does not constitute a credit check - they cannot do that without your authorization.
It is an informational inquiry only and ONLY your name and address is provided. You will see it if and when you look at your report, but it it does not appear if somebody does a "real" credit check!
Thus, it does not impact your credit history.
If you wish, you can inform the 3 credit reporting agencies to stop giving your name foe these types of inquiries, bit it is probably not worth the hassle!
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I think you confuse the OP's question.
The initial solicitation does not do anything to one's credit report, correctly explained as your post.
However, if the OP accepts the invitation, and finish the application process - i.e. fill out the form etc - then, drbond's post is the correct answer - the normal approval process began after you sent in the application form.
Read the fine print of any "pre-approved" solicitation in case you haven't paid any attention in the past.
It does not constitute a credit check - they cannot do that without your authorization.
It is an informational inquiry only and ONLY your name and address is provided. You will see it if and when you look at your report, but it it does not appear if somebody does a "real" credit check!
Thus, it does not impact your credit history.
If you wish, you can inform the 3 credit reporting agencies to stop giving your name foe these types of inquiries, bit it is probably not worth the hassle!
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I've recieved this type of letter before. I was a holder of a card beneath the level that they promoted. I just phoned in and gave them my approval to upgrade me to the next tier level card. They did not give me a minimal credit line, my normal line of credit was preserved in the transfer process.
Sanosuke!
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I've recieved this type of letter before. I was a holder of a card beneath the level that they promoted. I just phoned in and gave them my approval to upgrade me to the next tier level card. They did not give me a minimal credit line, my normal line of credit was preserved in the transfer process.
Sanosuke!
This is a different scenario. The op received an offer in the mail, he does not state that it is an upgrade offer. An upgrade offer made by a bank or otherwise does not always involve a credit pull. The methods of a upgrade do vary. 1. Offer to change to a different card (product) or type (vi/mc/ax) with no credit pull and all limits stay the same. 2. Offer to change to a different card or type and they pull a report (hard or soft) and may adjust your credit limit. In these first two types the one receiving the offer is a cardholder with the same bank and it is just a product change. 3. Card offer is received in mail by a person who is not currently a customer and upon acceptance of the offer (by calling in and saying i want the offer or filling out a form and mailing it in or by going online and entering a code) a hard pull is performed and the normal application process is done. 4. Some banks in years past did pre-approved apps and did not pull a bureau but the limits were LOW and the fees were high, so they really did not care about your credit. Those days are mostly gone.
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To respond to OP: in most case they ask someone like FICO to give them people who fall in certain range. Let's say FICO between 700 and 770, and they send solicitations out to all of them.
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I'm not sure my info is rock-solid, but here's what I understand:
When you get a so-called "pre approved" offer, the card issuer is soliciting YOU. (Rather than you seeking to get a new card.) If you reply to the invitation and request the card, the issuer does proceed to do a full, formal credit check on you. So far, so good, and if you are approved for the new card, all is well. If, however, for some reason they decide not to give you the card (such as your credit picture being worse than they thought), the refusal does not go on your credit report. (It's sort of like the issuer saying, "our bad. We thought you'd qualify for the card, but we goofed up.") As a result, it does not show up as an adverse credit event on your record.
But if YOU approached the card company out of the blue and initiated the request for a card and were turned down, I think that would show up on your credit report. This is the sort of adverse event that can (I think) lower your credit score and/or trigger your other credit lenders to hike up your rate. (The credit agencies assume that if you initiated the card request, it's because you may be in trouble and need more credit, so they then consider a turndown to be a negative against you.)
So, I think that responding to a "pre approved" invitation is sort of a neutral (invisible) event on your credit report going forward.
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I'm not sure my info is rock-solid, but here's what I understand:
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Your info is shaky and your understanding is wrong.
For your information:
The denial of credit does not show up on your credit report - whether you applied it on your own or from solicitation. However, Federal law requires the issuer gives you the reason of denial, and you are entitled to a free copy of your credit report should the issuer base the denial on information on your credit report.
A hard pull, whether resulting to issuance of a card or a denial of a card, showed up on your report, and too many hard pulls, even all resulting in card/loan issuance, would still have some negative effect on your report in the intricacy of FICO calculation.
Late payment, default, card cancelled by issuer... these are the adverse items that show up on your report and affect your FICO negatively.
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I'm not sure my info is rock-solid, but here's what I understand:
When you get a so-called "pre approved" offer, the card issuer is soliciting YOU. (Rather than you seeking to get a new card.) If you reply to the invitation and request the card, the issuer does proceed to do a full, formal credit check on you. So far, so good, and if you are approved for the new card, all is well. If, however, for some reason they decide not to give you the card (such as your credit picture being worse than they thought), the refusal does not go on your credit report. (It's sort of like the issuer saying, "our bad. We thought you'd qualify for the card, but we goofed up.") As a result, it does not show up as an adverse credit event on your record.
But if YOU approached the card company out of the blue and initiated the request for a card and were turned down, I think that would show up on your credit report. This is the sort of adverse event that can (I think) lower your credit score and/or trigger your other credit lenders to hike up your rate. (The credit agencies assume that if you initiated the card request, it's because you may be in trouble and need more credit, so they then consider a turndown to be a negative against you.)
So, I think that responding to a "pre approved" invitation is sort of a neutral (invisible) event on your credit report going forward.
This information is TOTALLY INCORRECT! Please everyone just pretend it is not here.
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Your info is shaky and your understanding is wrong.
For your information:
The denial of credit does not show up on your credit report - whether you applied it on your own or from solicitation. However, Federal law requires the issuer gives you the reason of denial, and you are entitled to a free copy of your credit report should the issuer base the denial on information on your credit report.
A hard pull, whether resulting to issuance of a card or a denial of a card, showed up on your report, and too many hard pulls, even all resulting in card/loan issuance, would still have some negative effect on your report in the intricacy of FICO calculation.
Late payment, default, card cancelled by issuer... these are the adverse items that show up on your report and affect your FICO negatively.
Good overview. Just one thing to add. The negative effect on your score from applying for credit is temporary. The theory behind it is that it prevents a consumer from simultaneously receiving multiple new lines of credit which would put that consumer beyond their viable limits.
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If you wish, you can inform the 3 credit reporting agencies to stop giving your name foe these types of inquiries, bit it is probably not worth the hassle!
I did write a letter to Opt Out (https://www.optoutprescreen.com/)of preapproval offers. I have noticed a decline in offers from random companies. However, this year I joined many frequent traveler programs since I began traveling for work. I get credit card offers from United weekly and occasionally from other programs. This is pulled from the program's database and not from the credit reporting agencies' databases. I also get offers from my college alumni association and honorary societies. I'm sure I could opt out of those if I read the letter instead of sending it directly to the shredder.
Does anyone know opt out information for frequent travel programs off the top of their head?
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correct it is temporary 24 to 48 months.
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Log onto the website and signin using your username and password, go to options and opt out of all marketing, solicitations or promotions.
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Nearly all of the responses to the OP's question are completly WRONG. Credit card companies will have done a " soft inquiry (a inquiry that does not affect your score)" on your Equifax, Experian, or Trans Union credit report if they claim you are Pre-Approved. To verify this the app must have the OPT-OUT/PRE-SCREEN statement. If the app does not have this, it is a simple INVITATION TO APPLY.
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correct it is temporary 24 to 48 months.
Inquiries officially fall off the credit report after 24 months. However, inquiries that are older than 60 to 90 days seem being generally ignored, esp if someone have decent FICO to begin with.
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Nearly all of the responses to the OP's question are completly WRONG. Credit card companies will have done a " soft inquiry (a inquiry that does not affect your score)" on your Equifax, Experian, or Trans Union credit report if they claim you are Pre-Approved. To verify this the app must have the OPT-OUT/PRE-SCREEN statement. If the app does not have this, it is a simple INVITATION TO APPLY.
Incorrect, even a soft hit requires permission.
These solicitations are based on a pre-screen criteria selection process.
Upon application a hard hit is performed.
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Inquiries officially fall off the credit report after 24 months. However, inquiries that are older than 60 to 90 days seem being generally ignored, esp if someone have decent FICO to begin with.
Incorrect, they are not ignored, they are included in the matrix. Inquiries older than 6 months do not however, have much of a bearing on the applicant.
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Incorrect, even a soft hit requires permission.
These solicitations are based on a pre-screen criteria selection process.
Upon application a hard hit is performed. Not neccesarily!
Again you are wrong... A soft inquiry does not require permissable purpose as stated by the Fair Credit Reporting Act (FCRA) and Fair and Accurate Credit Transaction Act (FACTA) . A soft inquiry only inquires about FICO scores, and/or a account review.
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Let me clarify if you will. There is more than one type of "soft hit" which is really a limited inquiry. They all fall under this definition:
An item on a person's credit report that indicates that someone has asked for a copy of his or her report. Soft inquiries can be from current creditors reviewing the file, prospective creditors who want to send out an offer such as a pre-approved credit card, or a person's own review of their file. They are not included in the formula for determining a person's credit score.
The PRM inquiry does not require permission. All others require an initial application. The information supplied in a PRM is only a score. The information for different types of inq vary with the type. So like I said you will have a "hard hit" when you accept a pre-screened application. There are so few exceptions to this these days that I am not going into that.
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Let me clarify if you will. There is more than one type of "soft hit" which is really a limited inquiry. They all fall under this definition:
An item on a person's credit report that indicates that someone has asked for a copy of his or her report. Soft inquiries can be from current creditors reviewing the file, prospective creditors who want to send out an offer such as a pre-approved credit card, or a person's own review of their file. They are not included in the formula for determining a person's credit score.
The PRM inquiry does not require permission. All others require an initial application. The information supplied in a PRM is only a score. The information for different types of inq vary with the type. So like I said you will have a "hard hit" when you accept a pre-screened application. There are so few exceptions to this these days that I am not going into that.
I wish I could respond to this... but I was " Warned not to debate" (via PM) DRBOND on this subject as this individual is an " Expert in this field and wrote the regs " :rolleyes: :rolleyes: :rolleyes: :rolleyes:
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Promotional inquires are not the same as a soft inquiry. All soft inquires to my knowledge require the consumers approval. If the soft inquiry is an account review, the consumer gave their approval to the creditor in the original credit application.
I think that it is up to the creditor, but most creditors will do a hard inquiry when you apply for credit or respond to a credit offer (pre-approved or otherwise).
As an exception, I have applied for additional credit with AMEX ($10k credit increase on HH AMEX and a Fidelity AMEX Platinum) and been informed that they can use an account review that is less than 90 days old. This scenario occurred in 2006. Similarly Discover can process some credit increases without an additional inquiry. However, these are the only times that I have applied for credit or an increase and not seen a hard inquiry.
As for credit inquiries. They stay on your credit report for 2 years. The scoring models do not place much emphasis on inquiries older than 6 months to a year. However, some mortgage lenders may express concern. Personally I have not been too worried about it. My Equifax has about 15-20 inquires in the last 2 years. My credit score is still around 780-800. However, I do not have any late payments. My balance on all credit cards (on my report) is zero except for 1 card (approx $300 on average). I have a 16 year credit history with several creditors. I have multiple mortgage and installment accounts in my credit history, not just revolving accounts. If you are in a different situation, that many inquiries could be damaging. Once you go below the 700's really bad things start to happen. A lot of creidit inquiries and new accounts can drop you by as much as 80 points according to the FICO propaganda.
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I get credit card offers from United weekly and occasionally from other programs. This is pulled from the program's database and not from the credit reporting agencies' databases.
Does anyone know opt out information for frequent travel programs off the top of their head?
I agree, my 4-year-old kid receives pre-approved offer from United on a monthly basis.
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I agree, my 4-year-old kid receives pre-approved offer from United on a monthly basis.
All of my children get pre-approved offers from AA as well. Kind of funny I think. I probably should let them apply and laugh about it.
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All of my children get pre-approved offers from AA as well. Kind of funny I think. I probably should let them apply and laugh about it.
It's never too early to establish good credit!