What is a pre-approved credit card and how can you get one instantly?

Being a bank customer, you must have received communication from various channels mentioning that you are pre-approved for a credit card. You must have got this communication through SMS, phone calls, WhatsApp messages, emails, mobile app notifications, and even your net banking. In this article, we will discuss what are these pre-approved credit cards, their benefits, and whether you should apply for them.

What are pre-approved credit cards?

A pre-approved credit card is an offering from a bank mentioning that you are approved for a credit card even without you having applied for it. Banks usually send pre-approved credit card offers to their existing customers. As a customer, depending on the time you have spent with the bank, the balance you have maintained, and the type of financial transactions you have carried out, the bank may send you a pre-approved credit card offer.

Before making the pre-approved credit card offer, the bank has already done some preliminary checks on your profile. They have already checked your credit score and report and evaluated your income and spending pattern from your savings account. So, they have done a basic evaluation of your credit worthiness.

If you decide to go for a pre-approved credit card, you must still complete the regular credit card application process by submitting the duly filled application form. If you don’t have an existing relationship with the bank, you must submit the Know Your Customer (KYC) and income documents.

The bank will evaluate your application, check the various eligibility criteria, and approve or decline the application accordingly. So, even though you were pre-approved for the credit card, it doesn’t guarantee you will get it.

What should you know about pre-approved credit cards?

One of the important things you should know is that a pre-approved credit card offer doesn’t guarantee the credit card, as discussed earlier. Before sending the pre-approved credit card offer, the bank does a soft enquiry on your credit report. A soft enquiry does not impact your credit score.

A pre-approved credit card offer is for a limited time. To sweeten the deal, the bank may offer the pre-approved credit card as a first-year free (FYF) or lifetime free (LTF). In some cases, the bank may offer bonus reward points or a gift voucher of a specified brand(s) of a specified amount as part of the limited-time offer. The offer will specify the date till which it is applicable. To avail of the bonus reward points or gift voucher, the bank may specify an amount to be spent within a specified period of getting the credit card.

Before sending you the pre-approved credit card offer, the bank does a soft enquiry on your credit profile. The soft enquiry doesn’t reflect in your credit report or impact your credit score. But, after you make the credit card application, the bank will do a hard enquiry on your credit profile. The hard enquiry will stay on your credit report for a couple of years.

When you get a pre-approved credit card offer, check the bank’s eligibility criteria. If you meet all the eligibility criteria and need the specified credit card, only then make the application. Because if you don’t meet some eligibility criteria and the bank rejects your application, your credit score will fall.

Benefits of pre-approved credit cards

Some benefits of a pre-approved credit card include the following.

• Higher approval chances: When you apply for a pre-approved credit card, the chances of approval are higher than a regular credit card application. With a pre-approved credit card, the bank has already checked your credit profile. If you have a relationship with them, they already have your KYC details. If you have a salary account with them, they already have your income data. Factors like a good credit score and income are important eligibility criteria for a credit card. If the bank has already evaluated these, the chances of credit card approval are high.
• Low to no documentation: As discussed in the earlier section, if you have a salary account with the bank, they already have your KYC and income details. So, when you apply for a pre-approved credit card with them, there may be low to no documentation as the bank already has these details.
• Faster processing: As the bank has most of the details with them due to an existing relationship, most of the checks are already done. Hence, with fewer checks remaining, the credit card application processing is faster than regular applications.
• Higher credit limit: A pre-approved credit card may come with a higher credit limit. As the bank has already evaluated your credit profile, income and spending habits, they will make a pre-approved credit offer as you meet the initial eligibility criteria. As the bank is making the pre-approved credit card offer from their side, they may offer a higher credit limit.
• Opportunity to build credit history: If you have not availed of any loan or credit card before, and this is your first credit card, it is an opportunity to build your credit history. Using the credit card regularly and making timely payments, you will build a good credit score and report over time. Thus, the pre-approved credit card can be an opportunity.

How to get pre-approved credit card offers?

One of the easiest and fastest ways to get pre-approved credit card offers is to open a savings account with the bank. If it is a salary account, it helps even more. The bank will evaluate your income and spending pattern through the savings account transactions. It will do a soft enquiry on your credit profile. For credit cards, they specify eligibility criteria like age within the minimum and maximum limit, credit score above the minimum specified, income above the minimum specified, etc. If you meet these eligibility criteria, the bank will send you a pre-approved credit card offer.

If you frequently use Apps like Airtel, Swiggy, Tata Neu, EazyDiner, etc., you may get pre-approved credit card offers. Companies like these or others with co-branded credit cards may make a pre-approved credit card offer as you are their regular customer.

Should you apply for a pre-approved credit card?

When you get a pre-approved credit card offer, check which credit card is being offered. Go through the features and benefits of the card. If it suits your requirements, and you fulfil the eligibility criteria, consider going for the pre-approved credit card. Sometimes, the pre-approved credit card offer may come with additional benefits like bonus reward points or a gift voucher, a first-year fee waiver or a lifetime free offer, adding to your benefits.

Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.