Does Getting Prequalified at Many Places Hurt Your Credit?

Receiving dozens of preapproved or prequalified offers may not affect your credit score at all. But you may end up hurting your score in the future if you take a company up on its offer. Prequalified offers may increase your risk of identity theft, which can annihilate your credit score. Also, preapproved and prequalified offers do not necessarily mean you qualify for an account.

Preapproved Credit Cards

Preapproved credit cards do not hurt your credit score because the company offering the line of credit did not receive your consent to run a credit check. However, if you accept a preapproved credit offer, the credit card company will run a hard credit check, which damages your score between 1 and 5 points. A preapproved credit card is not a firm offer, only an indication that the company believes you will meet the lender's requirements for an account.

Prequalified Offers

Some banks prequalify you for a loan, which means the bank agrees to lend you money before you decide on which house or car to buy. Prequalified loans hurt your credit score because the lender runs a hard check. Fortunately, a single credit inquiry has almost no noticeable impact on your creditworthiness, unless you have more than six within a year.

Rate Shopping

The Fair Isaac Corporation risk model gives borrowers a break on auto, mortgage and student loan applications. Depending on which version of the FICO formula the lender uses, applications within a certain window of time count collectively as a single credit inquiry. In the FICO 08 model, the latest version in 2011, the rate-shopping window lasts for 45 days after you submit your first application.

Tip

If you do not want prescreened offers, you can opt out of mailings from members of the Direct Marketing Association via Opt Out Prescreen. This may help avoid identity theft, because a thief might intercept your preapproved offers and direct the credit card to his address. For prequalified offers, try to send in applications in one day. The credit bureaus do not offer rate-shopping on credit card accounts.