Banks attempt to attract new customers through pre-approved credit card offers. These letters and phone calls advertise attractively low rates and generous rewards for a select few, yet people question how the bank found them in the first place. To find applicants, the credit bureau screens consumer reports for suitable names; many consumers believe there is a detrimental effect on their credit scores for such searches. But the truth is pre-approved credit offers do not dent your credit score; still, free remedies exist for those who would like to stop receiving pre-screened card applications.
What's a Pre-Approved Credit Card Offer?
In order to drum up business, credit card companies will often send out letters to eligible people that invite them to apply for a particular card or line of credit. Since the company only sends these letters to people who fit a set list of criteria, it's easier, and faster, to get a new credit card. If a person chooses not to accept the credit card offer, that's OK, too; she can simply destroy the mailer and go on with business as usual.
Screening Methods
The pre-screening process begins when the issuing bank purchases a mailing list from one of the big three credit reporting bureaus. The bureaus--Equifax, TransUnion and Experian--compile these lists according to specific criteria, including income level and credit score. After getting the information, the bank then creates a special offer to entice the customer into signing up for a card. If the list at hand is for 700-plus FICO score holders, the bank may offer a platinum card with a 0 percent interest rate for 18 months and double reward points. However, another list of bankruptcy filers holding a score below 525 might get a letter about rebuilding credit using a 10 percent APR credit card.
How Pre-Approved Offers Affect Credit
The pre-approved offer doesn't change the credit score at all. What happens is that the credit bureau reports the bank inquiry as a "promotional" hit. According to the Card Report, a consumer credit information website, "Since this type of inquiry was not initiated by [the consumer], it is not seen by other prospective creditors to whom you might apply and will not reduce your FICO credit score." Like any other credit card application, however, the bank requests what's known as a "hard pull" if a person actually returns the application in order to get the card. At that point, the inquiry shows up on the credit report. Too many of these a short window of time can negatively affect the FICO score.
How to Stop Pre-Approved Offers
If swamped with pre-approved credit card offers, the credit bureaus allow consumers to opt out of the mailing list system. Call (888) 5-OPTOUT to withdraw from all three bureaus at once, or write a letter to each separate credit bureau. The Fair Credit Reporting Act (FCRA) allows people to guard all personal information from third-party sales, so the bureaus have to act on each request in a timely fashion. If the offers keep coming after several months, contact the state attorney general's office for more help.
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