Inquiries for pre-approved offers do not affect your credit score unless you follow through and apply for the credit.

If you read the fine print on the offer, you'll find it's not really "pre-approved." Anyone who receives an offer still must fill out an application before being granted credit. The pre-approval means that the lender has identified you as a good prospect based on information in your credit report, but it is not a guarantee that you'll get the credit. The lender wants more information, like your annual income.

Pre-approved offers are sometimes referred to more accurately as "prescreened."

Key Takeaways

  • A pre-approved offer will be sent out after a soft inquiry indicates that you're a good prospect for additional credit.
  • If you apply based on the offer, the lender may make a hard inquiry before issuing the credit.
  • A soft inquiry has no impact on your credit rating.

The Two Types of Credit Inquiries

There are two types of credit inquiries into your credit score. They're known in the business as soft inquiries and hard inquiries. Only a hard inquiry is an indication that a lender is actively considering extending credit to you or has just done so.

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Credit Scores: Hard Vs Soft Inquiries

When a consumer fills out an application that accompanies a pre-approved offer, the lender will sometimes use the soft inquiry that has already been pulled to make its decision, or it may pull a new report using a hard inquiry.

A soft inquiry is seen only by the consumer. It has no effect on a credit score, and other lenders cannot see them.

Hard Inquiries

A hard inquiry is the kind that's used when someone applies for a credit card or loan, such as a mortgage or a car loan. It is an indication that the person is considering taking on additional debt and has taken positive steps toward doing so.

Potential lenders can see hard inquiries.

Hard inquiries can affect a consumer's credit score, but usually will only if there are a number of them. In any case, the impact of a hard inquiry on a credit score is very low compared with other factors such as a person's bill payment history and credit utilization ratio.

Hard inquiries on your credit report might be a concern if, say, you're about to submit a mortgage application. The lender might question whether you are about to take on substantial additional debts that are not reflected in your credit history.

Lenders will sometimes deny a credit application because an applicant has too many other recent inquiries. This might indicate that they are going through financial difficulties or anticipating big expenditures in the near future.

These hard inquiries fall off a credit report after two years. If you can't wait two years, one of the credit repair companies might be able to get the hard inquiries removed sooner.

Soft Inquiries

A soft inquiry is used by a lender while deciding whether to pre-approve a consumer for a credit card. Other soft inquiries occur when a consumer's current lender pulls a credit report for an account review, or when a debt collector checks a credit report for recent activity.

When you check your own credit rating, it gets logged as a soft inquiry.

Even hard inquiries, which are initiated when you apply for credit, don't have much effect on your creditworthiness—unless you have a lot of them in a short period of time.

How to Opt out of Pre-Approved Offers

If you prefer not to receive pre-approved credit card offers, federal law allows you to opt out for five years at a time. To do that, you can either call 888-5-OPT-OUT (888-567-8688) or visit www.optoutprescreen.com. You can also opt out of pre-approved insurance offers.

It's also possible to opt out permanently, starting at the website above. After you make your request online, you need to fill out, sign, and return a permanent opt-out election form.