When you get a pre-approved offer for financing such as a credit card or car loan, you don't have to worry about your score. However, while a pre-approval doesn't do anything to your credit score, applying for the account that the offer contains will. The difference is that when you apply, you're choosing to allow lenders to look at your credit report so you can get more credit, and credit bureaus can judge you for that. They generally don't hold you responsible when someone else does it.
The Pre-Approval Process
Also known as pre-screened offers, pre-approved offers are a marketing tool that the lending industry uses to find potential customers. Sometimes lending institutions contact a credit bureau, give them a set of criteria, and then send a mailing to the list of people who meet that criteria. In other cases they send their marketing list to the credit bureau and ask it to tweak the list to only include people that have adequate credit. In either case, the credit bureau checks the credit of the people on the list to see if each person meets the standards of the offer.
Hard vs. Soft Inquiries
Whenever your credit gets checked, it goes on your credit report. Credit inquiries come in two forms. Soft inquiries happen when you check your own credit or when it gets pulled without your knowledge or permission as part of a pre-screening process or by one of your existing creditors. They aren't included in your score. Hard inquiries, which generally come about when you apply for credit, are.
The Meaning of Pre-Approval
When you get a pre-approved offer, usually it doesn't actually mean that you're pre-approved for the offer. Instead, it means that the company has looked over some basic information on you and thinks you are likely to qualify. However, you still have to apply, have your credit checked and go through the approval process. The offer you receive in the mail that says you are pre-approved might -- or might not -- be better than one that you can find yourself, so shop around a bit before applying.
If you don't want to get pre-screened offers, you can stop them from being sent. The credit industry lets you block offers for a five-year period by calling its toll-free number (888-5-OPT-OUT) or applying on its website (see Resources). You can also permanently opt out by downloading a form from the website, filling it out, printing it out and mailing it in, if you prefer.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.