Credit card prequalification: What it is and why it matters

People are drawn to a specific credit card for many reasons, including great cashback and rewards, a high credit limit, a generous balance transfer offer and more. However, getting a new credit card in your wallet, especially one with premium benefits and perks, isn’t just a matter of ordering the one you want. When you apply for a credit card, the issuer approves or denies you based on your creditworthiness. Credit card prequalification gives you a good indication (though not a guarantee) if you would be approved for a specific credit card. Learn more about credit card prequalification and why it matters.

What is credit card prequalification?

Credit card prequalification allows you to see if you will likely be approved for a specific credit card before applying. By filling out some basic information, such as your full name, income and housing status, credit card lenders can tell you if you’re likely to be approved or not. Prequalification can be done with a soft credit pull as opposed to a hard credit pull, making it an attractive option before submitting a credit card application.

How does prequalification differ from preapproval?

While prequalification and preapproval are similar, the two have minor differences. Some lenders use the terms interchangeably, but prequalification is generally a faster and less detailed process, while preapproval is more accurate but can take longer. Both serve the same general purpose, which is to indicate whether your application for a specific credit card will be approved.

What are the benefits of credit card prequalification?

No hard credit pull

When you apply for a credit card, a hard credit pull will occur. By going through the credit card prequalification process, you get a good indication of whether you would be approved for the card you’re interested in with only a soft credit pull. This soft pull still allows the lender to review your credit report but does impact your credit score. While you will still incur a hard pull if you later decide to apply for the card, you avoid a hard pull if you end up not passing the prequalification process.

Unlike soft credit pulls, a hard pull can negatively impact your credit score. They typically stay on your credit report for two years. Having one or two hard pulls doesn’t usually lower your score by much, but many of them within a short time can cause your credit score to drop. Hard pulls make up 10% of your credit score, so they aren’t the most impactful, but it’s still a good practice to avoid them if you have an alternative, such as getting prequalified.

Quick and easy

While getting approved for a credit card can take under a minute in instances where someone is clearly qualified for the card, it can get drawn out if the issuer needs to review your application manually. Credit card lenders can take up to 30 days to approve or deny your application. On the other hand, prequalification can almost always be completed in minutes, as lenders don’t have to apply the same level of scrutiny on a prequalification.

What are the drawbacks and limitations of credit card prequalification?

Not guaranteed

While a successful prequalification usually means you’ll be approved if you apply for that credit card, it’s not guaranteed. It’s uncommon, but a lender can decide not to approve you even if you prequalified. Full approval can illuminate aspects of your application that were not present in prequalification, leading to a denial.

The opposite can also be true—it’s possible to not prequalify for a card but get approved anyway after applying. Think carefully before applying for a card you failed to pre-qualify for, as there’s a good chance you won’t be approved, incurring a hard credit pull in the process.

Not always available

While most major lenders offer credit card prequalification, not all do. If there is no prequalification or preapproval process, you must submit a full application. You may be able to research the typical markers you need to be approved (credit score, income, etc.) but third-party sources compile these stats and should not be taken as 100% accurate.

If you have the option to prequalify for a credit card you’re interested in, you should consider taking advantage of that option. Avoiding a hard pull and quickly knowing whether you’re likely to be approved are huge benefits to prequalification, and there are almost no downsides to doing so. While credit card prequalification is not always an option, it’s an option well worth taking when you can.

Learn more about maintaining great credit with credit cards:

• How is your credit score calculated?
• When is your credit score pulled?
• Credit limit increase: Pros, cons and when you should do it