A pre-approved credit card offer is a promotional vehicle banks and financial institutions use to offer credit to customers who qualify on some internal parameters. A normal credit card application, where your complete credit history and income are verified, is not the case with a pre-approved offer. The pre-approved offer is extended based on preliminary verifications—your previous experience with the bank or your current credit score. These are generally offered to customers with excellent credit history and a good payment record.
How do banks determine eligibility?
Banks use a combination of data points to pre-approve customers for credit card offers. These are your credit score, credit card or loan payment history, salary, and banking relationship with a bank. If you are already a customer of a bank—by way of a salary or savings account, for example—your bank may consider your spending history and balances to assess whether you are a good fit. Credit bureaus like CIBIL or Experian are also utilized, as banks often use their databases to generate pre-approved lists.
Does pre-approved mean guaranteed?
Even if the "pre-approved" designation may make someone think of immediate qualification, it does not entirely mean approval. In a majority of cases, you are still in the streamlined application process where the bank may ask for a few documents or verify income and identification. The chance of being denied is lowered because the prospect check has already been conducted. Final approval is subject to qualifying according to all of the requisites at this point.
How to check if you have a pre-approved offer
You can receive pre-approved credit card offers in two ways. The majority of the banks send a mobile number or email notification to their prospective customers. You may also find your bank's net banking or its mobile banking app, where pre-approved credit offers are usually reflected in the 'Offers' or 'Cards' section. You can also find some banks offering an option where you can just enter your PAN number and mobile number on their website to check if you have any pre-approved credit cards.
Should you take an approved credit card?
It's worth considering a pre-approved credit card if you need ready access to credit and the terms of the card—interest rate, fees, and rewards—are favourable. Most of such promotions come with benefits like zero joining fee, low interest rate, or unique reward programs. Carefully read the fine print, especially on annual fees or conditions to retain benefits.
Impact on your credit score
Requesting a pre-approval card will usually result in a soft inquiry, which will not damage your credit score. But if you accept the offer and the bank performs a hard pull when they are completing your verification, it could have a slight temporary effect. If you keep on paying your bills on time, though, the additional line of credit will lower your credit utilisation ratio and raise your credit score in the long run.
Credit card pre-approvals are a simple and convenient way to boost your available credit—especially if you already have a positive credit history. Just be sure the offer is right for your financial goals and that you use the card judiciously.
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