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What does pre-approved mean? | ZDNet

What does pre-approved mean? | ZDNet
Gen Z Female Enthusiast Gets News About College Funding In Home Series With Variety Of Expressions

It usually begins with a letter in the mail, or a credit invitation from a credit card or mortgage company. But what exactly does that mean? Is it a credit card offer? Was this home loan approved?

Pre-approval and pre-qualification are two completely different things, and knowing the difference can save you a lot of heartache and stress. Before you open your next credit limit, here’s what you need to know about what pre-approval means.

What does “pre-approved” mean?

Pre-approval is when something is offered based on the expectation of good credit. Creditors will make an offer based on information usually provided by credit bureaus, identify good candidates and contact them directly. Whether it’s a card in the mail, a phone call, or even a text message, this is how credit companies make consumers aware of their services.

Does pre-approval affect my credit?

The offer is based on a flexible credit withdrawal that does not affect your credit. However, you will still need to obtain official approval before you can proceed. It is not a formal approval but an invitation to apply for the actual product, regardless of whether it is a loan or a line of credit. After applying, the company will pull your credit hard in order to review your credit history in more detail. Unlike a pre-approval, this difficult withdrawal will affect your credit score.

How does pre-approval work?

Credit card companies and lenders maintain relationships with credit bureaus in order to identify the right people for them. To respond to this credit invitation, you will need to go through the actual approval process. This enables you to have a final decision on whether to take out this loan or credit card.

What are the benefits of pre-approval?

There are multiple benefits to obtaining pre-approval from a lender:

  • Fees are not evaluated
  • It does not affect your credit score
  • Saves application time
  • Allows you to check your credit qualifications
  • It can lead to more competitive offers
  • It may speed up your application

Perhaps most importantly, pre-approval helps you understand your credit score and what you may qualify for, both now and in the future.

What is the difference between pre-certified and pre-qualified?

When you pre-qualify for something, it means you have a better chance of getting approved. Qualifications can come from a particular degree or credit range, whether you own your home or even where you live. This information is then used to determine whether you receive a pre-approval offer.

What do I need to get pre-approved?

Credit cards are often associated with pre-approval, but there are several situations where you may need pre-approval:

  • Credit card
  • Mortgage
  • New car
  • loan

Regardless of your situation, we recommend that you reach out to your creditor or lender for some additional details regarding the pre-approval process and credit requirements.

How do I get pre-approved?

Pre-approval is granted after the credit application is completed. You will need to provide your basic information, such as your Social Security number and your income.

Then, it is up to the lender to approve or reject your application. Most approvals are based on specific credit score requirements, as well as the debt-to-income ratio. A debt-to-income ratio of 36% or less is recommended for the best chance of getting approved.

Many lenders also offer tools to help you determine the best financial path for your situation. For example, Capital One offers a simple pre-approval tool that allows you to see your options before proceeding with the entire application process.


The most important thing to remember about informed consent is that it does not imply consent. It simply means that you have been vetted by the lender, and you are invited to do so Progressing To get an offer based on your credit score or any other requirement.

Before completing the application, remember that the application will mean an extreme withdrawal of your credit, affecting your credit score, while the pre-approval simply uses a simple withdrawal. It’s enough to make you think twice when you receive this offer in the mail.

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