Pre-Approved Credit Card Offers - Part One -

“Congratulations! You have been pre-approved for this special credit card offer.”

“Low Interest Rates.”

“Credit limit’s of up to $100,000.”

Included in the letter is usually a short application form with some fine print on the front and back. But what does it really mean?

Credit card companies are in a constant state of marketing to seek out new customers to replace those who leave and to keep their growth rates high. With all the costs associated with advertising and application processing, establishing new accounts can be extremely expensive.

The cost to attain new accounts can easily exceed $200 or more per account. These types of advertising campaigns typically have a very poor response rate. It is typical for less than 3% of the recipients to complete and return the application.

Instead of mailing these types of credit card offers to everyone with a physical mailing address, banks usually target these mailings towards people who have a better chance to respond, qualify for credit, and become a new customers.

While preparing for one of these types of mail solicitations, a creditor may use a set of minimum standards that they’ll send to one of the credit bureaus, (Equifax, Experian, or Trans Union) to get a list of consumers who meet their minimum qualifications required by that particular creditor.

The creditor may even send another list obtained elsewhere, (a database from a marketing company) and have the bureau return a sub-list of people who match their ‘pre-approved’ criteria.

These mailings will then be sent out to the people who have matched the banks criteria but may take as long as two months before they wind up in the customer’s mailboxes.

By obtaining a copy of your credit report, you may see inquiries that are labeled as “promotional”. This would typically mean that your report was checked through a “pre-approved” list, even though it does not guarantee that you qualify to receive a specific offer.

Due to the fact that the inquiry was not initiated by you, it is not seen by other creditors who may check your report if you fill out an application with them. In addition it will not affect your FICO credit score.

There are many sub-prime creditors who will actually use this type of pre-screening process to seek out individuals with moderately damaged credit who are more likely to be willing to pay higher than normal interest rates, fees and other requirements designated by that specific creditor.

Once an individual completes the application form sent to them and returns it, it will be sent to a processing center, which may not even be owned by that specific creditor, where the information is entered into a system that will run a new credit check on that specific consumer.

This is done to determine if anything in that individual’s credit report has changed for the worse since the original verification. This new report (not the original one) is then used for the final approval or rejection of the credit application.

Sometime fairly small changes in the consumer’s file since the original check can result in a rejection.

Click Here To Read Pre-Approved Credit Card Offers Part Two