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Pre-Approved Credit Card Offers

On Behalf of | Dec 9, 2016 | Consumer Protection

With the holiday season just around the corner, you have probably noticed an abundance of “pre-approved” credit card offers in your mailbox.  But what does this mean? Are you really approved?  Can you just start using the card?  Should you start using the card?  Today, credit card companies use marketing strategies to send out these pre-approved credit card offers to consumers with specific demographics, based on where you live, your age and your credit standing.  However, it is important to know that while these offers may seem ideal, the offer is not a guarantee.

Receiving Pre-Approved Offers

First, how did the offer end up in your mailbox?  Even if you did not sign up for a credit card offer, credit card companies hire businesses to conduct their research and use lists from other sources that you may have signed up for in the past.  These lists include magazine subscriptions and other credit card companies, like retail store cards.  Additionally, credit reporting agencies, like Experian, Equifax and Trans Union, provide credit card companies with lists of credit worthy consumers to send pre-approved credit card offers.

What Does “Pre-Approved” Mean?

Second, why are you pre-approved?  When you receive a pre-approved offer in the mail, it means that a credit card company has received information from a credit bureau that you are a “sufficient” customer.  Based on the information available to the credit card company, it believes that you would be a good customer and the company knows exactly how much credit it is willing to extend to you if you agree to formally apply for a card.  Once you receive a pre-approved offer you can sign the offer and provide additional information regarding your credit, usually your social security number.  By signing, you agree to allow the credit grantor to access your full credit report and review your credit history.  This type of access will affect your credit score and can be viewed by other lenders.

How to Opt Out of Pre-Approved Offers

As a consumer, you have the right to opt out of pre-approved credit offers.  If you are the type of consumer who has difficultly saying no, consider opting out of receiving these offers.  Just because a credit card company is offering to extend you credit, does not mean you should accept the offer.  Often times, pre-screened credit offers target consumers who are having financial problems, hoping you will open their credit card and pay their interest and fees.  First, consider the terms of the card being offered…are they the best terms for you?  Second, do you need another credit card…do you already have more cards than necessary, are you having a difficult time paying off what you already owe?  If you would like to opt out of receiving these tempting offers, you can call 888-5OPTOUT.

As a general rule of thumb, it is usually more beneficial to seek out a credit card that is better suited to your needs than it is to accept/apply for a credit card offer that comes in the mail.  If you believe your rights have been violated under the Fair Credit Reporting Act and you would like to speak with a licensed attorney, contact SmithMarco P.C. for a completely free case review.