I get these ads in the mail all the time that say I have Pre-approved credit and they want me to get a Discover card or CitiBank. They promise a great rate and no annual fee.
And they really push for you to shift over your other card balances.
I have perfect credit (never missed a payment, and thus never carried a balance) on my one MasterCard.
Then when I apply, the answer comes back “Insufficient prior credit balances”.
Well, Ok, I see now they didn’t want to service a retail card, but just get people with large balances to switch to their bank.
But then what does “Pre-approved” mean to them?
Had they seen my credit report at all? And if it was not to their liking why waste all our time sending me an invitation?
My experience has been that when it says “pre-approved” that they do no further checking, unless you ask for a specific credit limit above what they have already approved you for.
You are the first person that I ever heard of who was denied credit after being pre-approved.
“Pre selected”, means that they WILL do a complete credit check at the time when you return their junk mail.
I have also been denied credit after being ‘pre-approved.’ My reason was a little more obvious; I have a chapter 13 bankruptcy that was (at the time) still being paid. Although apparently my credit score was high enough by that time to get me ‘on the list’, as soon as they did a thorough credit check the bankrupcty nixed the deal.
In Maria’s case, I don’t think that the problem is that she has bad credit, it’s that she has insufficient credit. Most of the credit management books and web sites that I’ve read indicate that lenders want to see that you’ve actually had some credit and have handled it properly before they entrust you to more credit. If you don’t have much of a credit history at all, then you’re considered a risk because you haven’t proven your credit worthiness yet.
If you want to remedy the situation, it might be good for you to check with Consumer Credit Counseling; they could probably provide you with advice on how to improve your credit standing in ways that best suit your situation.
Cuckoorex - I think you are wrong about your case being more “obvious”. Why wouldn’t a bankruptcy, if it’s that big a deal, surface in even the most generic score?
I’d bet they never really checked either of our scores, that it was all a bluff.
As to Susanann’s experience, if she has a balance they will all be hungry to swap for it. A balance is “cheap” in their terms because it brings in interest without them having to deal much with merchants, which represents their main overhead.
‘hey, credit bureau, give me a list of people that live in my market area that have a score between x and y or a credit report with no more than ‘x’ number of derogs…and I want 4 million names…etc’
credit bureau: here ya go Mr Customer
Mr Customer: thanks credit bureau
Once you apply formally, they pull your credit report and apply their own more spcific rationale/scoring that isn’t quite identical to the criteria that the list was created off of, or some time has passed and your report became somewhat ‘worse’ than the minimum standardn for the list when it was run.
(NOTE: MOST credit denials in this world ARE from people who were originally pre-approved until the applied. MOST denials spin off of pre-approved lists, but the overwhelming number of people on the list get approved.)
None of the is speculation.
~Philster. Resident Credit Guru
Philster, surely you know that “pre-approved” also means “Please provide us additional information for the mailing list we are selling.”
I had a terrible credit accident a few years ago and I still get pre-approved applications all the time. So do the imaginary friends who subscribe to magazines at my house and have product warranties.
Either you didn’t pass the second credit review or flagged the security system in some way. I’ve worked pre-approved applications that were sent to the former resident of the home and the new resident figured they could scam a card. Not with me around…
For about a year, I regularly applied–and was denied–for “pre-approved” credit cards. Believe me, they only ask you once, and within short order that form of junk mail decreased to nil.
Many of the letters I received in response clumsily attempted to explain themselves, “you were pre-approved, provided that a check of your credit rating showed that you were eligible to apply.”
Later I learned that every credit card denial also counts against your credit rating. Oops. But at least my credit rating is in the toilet and the fool card companies know it now.
When I was younger, I use to get pre-approved credit card offers all the time, and they were just that, I just had to send back the card saying that I wanted my credit card, and I got it. Now whenever I get “pre-approved” credit card offers, they have a miniature application you have to fill out, and somewhere in the letter, it mentions them running a credit check, which means of course, that I’m really wasn’t pre-approved.
Hey I just wanted to bump this because the OP still hasn’t gotten his question answered and I’m curious too.
How is it legal for a credit card company to tell you you are pre-approved when clearly that is completely false? Aren’t there truth-in-advertising laws?
racekarl, thye provide a full explanation in the letter/forms, and they make ann honest attempt.
Pre-approved is different than Approved. Their is a legal difference. Pre-approved essentially means you have a good chance of getting the card when submitted for…tada! FINAL approval.
And debunking a myth put forth by sofa king: INQUIRIES (since denials are nowhere on a credit report) CAN potentially lower a credit score if there are too many recent ones in a short period of time! WHY?, you ask…because anyone reviewing a recent credit report doesn’;t know if those inquiries resulted in NEW UNKNOWN amounts of debt you potentially incurred. Maybe those inquires resulted in you getting 100k and now you are over extended for the loan/card/debt you want!
AND, multiple/accidental inquiries are ignored by scoring models, so that if you shop for a mortgage, it doesn’t look like you have two or three new big loans of an unknown amount.
I’m kind of surprised that any company still uses “pre-approved” on their offers. IIRC there was some legal wrangling about that several years ago but I don’t remember the details. My personal deluge of offers indicate I am “pre-selected” and quoting from the one I received just this morning:
There’s more but that’s the part that addresses the OP.
Something I didn’t know and a way to reduce some junk mail is that you can contact the Big Three credit bureaus and instruct that your credit report not be used in connection with these mass mailing offers. Call 1 888 567 8688.
I stand corrected. I just got a rejection letter today, after I mailed in a pre-approved mailer. This is the first time it ever happened to me. I guess pre-approved does not mean what it used to, and it certainly does not mean pre-approved. Of course, I did ask for a large balance to be transferred. It is possible that if I had just sent in the mailer without asking for a large balance to be transfered, that it might have went thru automatically. Since I asked for a large balance to be transfered, someone(an actual person) had to look at it, to approve an amount that was probably larger than what i would usually get in a pre-approved credit card offer.
I was wrong in my earlier post, it wasnt the first time, and it wont be the last time.
Philster, I realize that you aren’t advocating this as fair but merely providing info on how credit card companies view these practices, but REALLY, it’s so sad … the intent to deceive here is so nakedly obvious. I could hear Fat Tony (the gangster from the Simpsons) voicing these rationalizations: "Well I’m sorry that you did not read the fine print, my friend … "
It may be legal, but if it is, it means our watchdog agencies aren’t doing their jobs.