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Thread: Preapproved credit card offers

  1. #1
    PhillyDancer1982
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    Preapproved credit card offers

    Just wanted to get a few opinions on this...Lately I've been getting more and more "preapproved" credit card offers. Coincidentally, I'm actually looking to get another Visa or MasterCard in the near future, because I only have one Visa card right now and I realize that a lot of mortgage lenders and creditors like to see 2 major credit cards(but not many more than that). The only thing I'm uncertain about, is whether or not I'll actually get approved if I apply for these "preapproved" offers. If there is a good chance that I won't get approved, then I do not want to apply because all that will do is produce a hard inquiry. (Either way it'll produce an inquiry when I apply, but it'll be worth it if I get approved and actually have a card to show for it.)

    My question is: As long as nothing on my credit report changes, and I keep all my accounts in good standing with low balances, is it almost certain that I will be approved for a MasterCard when I apply for this "preapproved" offer?

    Another question: I have a few inquiries(2 for each bureau's report) on my credit report left over from summer 2004. Because inquiries only stay on a report for 2 years, they are ready to "fall off" soon. Should I wait until October to apply, when all of those old inquiries will be off my report? Will less inquiries result in me being approved for a higher credit limit than if I applied now? Or, does it not really matter because the inquiries are so old?(effect wears off with time, and although inquiries stay on a report for 2 years, they only get calculated into a FICO credit score if they're within 1 yr old)

    One last question: Am I a bit overextended on a few loans? I currently owe $10,500 on a Stafford student loan that was originally $11,000. I also owe about $20,000 on an auto loan that I got in November 2005, originally for $27,000. I pay more than the minimum on both of these each month. Could these loan balances affect if I get approved for this "preapproved" offer?

    Thanks for your responses and input!

  2. #2
    Featured Member Vamp's Avatar
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    Default Re: Preapproved credit card offers

    Pre-approval offers are genrelly based on a credit score. Im not one hundred percent sure how they recieve the information. It can be old. So the pre-approval could be based on old information, then you apply and then denied. You may be approved but then for a lower credit limit than sent to you. It all depends on your current credit score if you will be approved or not.

    From my experiance mortgage lenders do not care how many credit cards you have. They are looking for a good credit score, making payments on time, work history, and annual income.

    "Inquiries may or may not affect your FICO score.
    A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries that can be factored into your FICO score includes:
    Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
    Number of recent credit inquiries.
    Time since recent account opening(s), by type of account.
    Time since credit inquiry(ies).
    A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit, inquiries from employers, or your own requests to see your credit report.
    For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For others, one additional inquiry would take less than 5 points off their FICO score.
    Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk: People with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than people with no inquiries on their reports.

    They stay on your credit report for one year and only are 10% of your FICO score. Check out the link for information when you are rate shopping with lenders.
    http://www.myfico.com/CreditEducatio...Inquiries.aspx

    If you are overextended on the two loans why add another credit card to the mix? My advice would be to go to www.myfico.com/CreditEducation to learn what goes into your credit score from the source. Get a totally free, no membership, no fees credit report from www.annualcreditreport.com. Paying off the two loans in a timely manner will help your credit score more then adding another credit card.

  3. #3
    God/dess VenusGoddess's Avatar
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    Default Re: Preapproved credit card offers

    ^ To add to what Vamp said, if you are already over-extended on your current installment loans, getting another credit card could actually really HURT your credit score instead of helping it. Mortgage companies couldn't care less if you have one credit card or two. They care about the timely payments on whatever accounts you have open. If you have no credit cards, but have 4 installment loans that have been paid on a timely basis for 3 years...they'll go with that. If you have 1 installment loan that is fairly new and 2 credit cards that you have had for 2 years...all paid on time...you should be fine.

    But, don't go getting more credit with the assumption that it's what you need, when in fact, it could really pull/hurt your credit more than help it.

  4. #4
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    It might look like I'm overextended on the loans, but in fact I'm not. The only reason that I do not pay more than I do on my student loan, is simply because the interest rate is so low...only 3.37% or so...so it wouldn't make sense for me to pay this off so quickly. I'm better off putting extra money into my ING savings account, which pays 4.25%. Plus, I am unable to put extra payments towards the principle balance of my student loan, so paying a lot more extra each month is discouraging because I do not know how much good it does. (I pay a little extra on the payments each month, but not as much as I would if I knew it was going towards the principle) As for the auto loan, yes I currently owe $20,000 on it, but I've been making very large payments(2-3X the required amount) and I'm planning to pay it off in full by summer or early autumn 2007. I'm looking to get a mortgage around spring 2008, so it'll be a full half year after I've paid off the auto loan to zero. The credit card would only be used to pay for purchases and then pay off in full(or nearly in full) by the statement date. I'm not looking for another credit card because I need to incur more ongoing debt, more of a way to establish myself with another bank.

    So if my credit score stays the same or increases from now til the time I apply for the preapproved credit card offer, will I be accepted? Or, is the preapproved offer sent to everyone?

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    Banned Melonie's Avatar
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    Default Re: Preapproved credit card offers

    One concept which hasn't been specifically mentioned is the potential negative affect of 'available credit' on some lender approvals. If a person has 3-4 credit cards, each with a line of 'available credit' of $3k - $5k - $8k then in theory that person could take on an additional $9,000 to $32,000 in additional debt tomorrow if they decided to. In theory this could create an additional $100 to $500 a month in credit card payment obligations. Student loans and car loans are 'known commodities' to lenders i.e. there is no doubt how much principal is owed and how much monthly cash flow is required to make the payments. But 'available credit' totalling tens of thousands of dollars represents a 'joker in the deck' to some lenders.

    When sizing up would-be borrowers for future loan approvals, if the person has a long history of financial responsibility and judicious use of credit cards, then the lender can be reasonably assured that large amounts of 'available credit' for additional use of credit cards will not represent a risk factor. However, if the would-be borrower's financial history is relatively short, and/or if their monthly earnings versus existing payment obligations (with the future loan payments included) is a bit dicey to start with, the existance of large amounts of 'available credit' may be looked upon as a 'dealbreaker' in regard to approving that future loan - irrespective of the actual impact of that 'available credit' on that person's FICO score.

    Agreed that in general two credit cards seems to be the magic number.

  6. #6
    God/dess Deogol's Avatar
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    Default Re: Preapproved credit card offers

    I think you have already showed credit worthiness by having so much already (especially the car loan) and your paying them on time.

    There is a ratio of credit to income and if that gets to high - they will deny the loan. They will have a rule about how much income can handle how much credit for how much risk to their own money (or that of those who will sooner or later purchas the loan out of a pool of loans.)

  7. #7
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    Right now, I only have one bank card(i.e., Visa or MasterCard) and despite paying on time, the limit is still relatively low. So other than my auto loan(whose original amount was $27,000), I don't have much available credit...my Visa has a $1500 limit and my store cards are like $300 each, which is peanuts! In fact, the reason that the interest rate on my auto loan isn't the best rate, is because I didn't have a very significant amount of credit before. I read that too much available credit is a bad thing, but sometimes not a big enough credit limit is bad too?

    I just don't want to apply for this MasterCard and get turned down. Sure my accounts are in good standing and always paid on time, and my Visa paid down to 20% or less of the credit limit each month, but I guess I'm just feeling unconfident.

    One last question: As stated before, I have a flurry of old inquiries from summer 2004 that are no longer factored into my credit score(because they're >1yr old) but will remain on my credit report until the month after the 2-yr mark. On TransUnion, I have two inquiries for when I tried to take out a personal loan in 8/2004(both were declined; I was desperate to go to college and I didn't qualify for financial aide or extra student loans). On Experian, I have two inquiries for credit cards from 8/2004...one for a Macy's card(declined) and a Discover card(declined). On Equifax, I have two inquiries...one for a Household Bank credit card(8/2004) and one for Cingular cell phone service(9/2004). So by waiting until September, they will all drop off except the Cingular one. If I wait until October, the Cingular one will drop off too...should I wait until October? Or, does it not matter that significantly? (The reason I have so many inquiries is beacuse in 2004, I was dirt-poor and desperate for extra credit to cover my college bills, and at that time I didn't know how bad too many inquiries looks; I would apply for a loan, get turned down for not having enough income, then apply at like 3 other places in the same month)

  8. #8
    God/dess VenusGoddess's Avatar
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    Default Re: Preapproved credit card offers

    If I am not mistaken, inquiries stay on your report for 1 year, but only affect your score (if you have too many of them at one time) for 3 months.

    If you've been getting a lot of "pre-approved offers" then look through them, find the ones that have the best rate/terms and apply to that 1 or 2. No more than that.

    Also, once you've had your car for 12+ months, most places are willing to refi and lower your rate. Not only does it help your monthly payment (we refied, lowered our rate, but still paid the same amount as the car payment was before we refied) but you will create more "positive" credit lines.

    So, really, just apply to the companies who have the best offers. If you get turned down for those 2 (or 1, etc) then wait a couple of months and apply to different companies. But, wait a month or two between inquiries.

  9. #9
    Featured Member maximvsv's Avatar
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    Default Re: Preapproved credit card offers

    The pre-approved card offers have a good deal of fine print in them. It will probably list the credit-worthiness requirements for the initial offer. If you don't meet those criteria, they will send you one of their $500 limit cards with medium interest rate.

    If you are looking to get your credit increased with a little more certainty, call the exiting card company and tell them you're getting offers to receive higher limit cards, so you want the limit on your current card increased, rather than going through all of the 'balance transfer' stuff. You can usually get it increased if you've been timely paying on your balances.

    The 4% savings account return sounds like a good idea, but you might want to see if a mutual fund can get you more. The bank interest is 1099'd, so you lose about a third of that interest to taxes at some point.

  10. #10
    Featured Member Vamp's Avatar
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    Default Re: Preapproved credit card offers

    From my experiance they only look at inquiries for the past year. Transunion is a more detailed credit report than the other agencies.

    I agree with maximvsv about calling your existing credit card and ask if you can increase your limit. I disagree with maximvsv about the mutal funds. Some mutal funds are as risky as stocks. You really should do alot of research before you invest in mutal funds.

  11. #11
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    OK Maxim and Vamp...I currently owe $1460 on a Visa card with a $1500 limit but will be paying this balance down to about $260 before the due date, even though the full "statement balance" as of the last statement date was less than that, essentially accruing no interest charges. (However, I wouldn't accrue interest even if this was a partial payment; I have 0% APR for a trial period, until October, as a reward for me being such a good customer) After I pay this balance down to $260, would I be a good candidate to raise my limit? Maybe I could say that my spending needs/capabilities are too big for the small limit on my card? Obviously if I pay down my balance each month, I can afford to make bigger payments and take on more total debt than say, $150 each month.

    The thing is, I just got a raise of credit limit in April...and it was the ONLY time Citibank gave me a raise, after many attempts to beg, plead, and threaten for an increase. (According to my slightly older friends with good credit, they've never been offered limit increases either and Citibank is stingy.) Would it be too soon to get another increase?

    Venus Goddess...I was looking to only get 1 more card, so that my bank cards would total the magic number of 2. The card I'm looking to get is a Citizens Bank Platinum MasterCard. A year ago I asked them the criteria, and they said it required a 640+ FICO score from Equifax. I know I have a bigger score than 640. I just don't want my current auto loan and student loan balances, although smaller than they would be if I'd made minimum payments, to keep me from getting approved.

  12. #12
    Featured Member maximvsv's Avatar
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    Default Re: Preapproved credit card offers

    If you're putting $1,000 on a payment in just a month or two, they shouldn't have any problem raising the limit to $2,000. They shouldn't have a problem with $5,000.

    I wouldn't recommend expressing any need for the increase as part of the negotiation. If anything, it should be along the lines of not being comfortable carrying around that much cash when you make larger purchases.

  13. #13
    God/dess Deogol's Avatar
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    Default Re: Preapproved credit card offers

    Ya know, having a lot of credit available to you is not necessarily an important thing.

    It seems in this society people work harder and harder to be in debt than to come out on top of things.

    It's like people take a prestige in being able to bury themselves in debt in this society. It is a strange thing.

  14. #14
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    Yes Peter, that is exactly what I use a credit card for...NOT to incur debt or buy things I cannot afford, but instead I use a credit card to pay for large purchases so that I won't have to carry around cash. I hate carrying cash on me because of the lack of security that comes with it. I also use a credit card for online purchases, paying utility bills over the phone(such as cell phone, cable, car insurance, etc), and other methods that I would not be able to pay with cash. Yes I can use a debit card for all these purposes, but I do not think debit cards are very secure either because if you lose a debit card, you're liable for up to a large amount of the purchases made by a thief; whereas if you lose a credit card, you're only liable for up to $50.

    But above all, I like using credit cards so that I can establish credit. Yes, it'd make me feel big and important and mature to have a $20,000 limit; whereas if all I had was a $200 limit on a "predatory lender" credit card, I'd feel rather untrusted and somewhat inferior. If I'm a good consumer who spends a lot on credit and pays her bill on time and more than the required minumum each month(I even pay off a good chunk of the balance during the 0% APR promotional periods when I wouldn't accrue interest either way!), I want to feel rewarded...similarly to how a raise or promotion on the job can make an employee feel rewarded.

    The only problem Maximvsv, is that Citibank generally requires producing a hard inquiry to give any kind of significant credit limit increase. And I do not want a hard inquiry because this will stay on my credit for 2 years and make me look bad, esp if nothing positive results from it(i.e., they run a hard inquiry then decide not to raise my limit). Sometimes they give credit limit increases WITHOUT making a hard inquiry, but these are less often and of smaller amounts, and it usually takes continuing threatening by the consumer to close his/her account before this happens. What would be an appropriate credit limit increase(without a hard inquiry) to ask for next time I call Citibank?

  15. #15
    Featured Member Vamp's Avatar
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    Default Re: Preapproved credit card offers

    I recently was hired by a large credit card company.

    The little secret is eligablity for credit limit increases, lowering interest rates, and returning fees is really based on profitablity. Profitablity isn't just the interest and fees they get from you either. If you charge alot of differant transactions and pay them off every month the credit card company still makes a profit from you. "Exchange" income is fees they recieve from merchant banks, merchants, and others for each transaction you make no matter the dollar amount. Are you sure it is a hard inquiry? Credit card companies have access to your raw credit score without it being considered an inquiry after your a cardmember. I learned that also. I can't go into the details but it might not require an inquiry at all.

    If you do get a new credit card I would suggest getting a rewards card. There are some great cards out there where you can get rewards or frequent flyer miles.

  16. #16
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    Although most credit card companies do NOT produce a hard inquiry when raising credit limits, I had it confirmed by Citibank multiple times that Citibank DOES. The ONLY times that Citibank raises limits without causing a hard inquiry, is on rare occasions, and when it is done this way generally the limit increases are smaller/less significant. I cannot understand why they would want to create a hard inquiry when, as you already stated, they already have access to my raw credit score. Citibank is just a retarded company, I guess. For example, my friend M--k had them for 5 years and always had good credit all around, yet it took until the 6th year before they would raise his limit. Even then, he had to respond to the limit increase by sending back forms, and he realized that he didn't want to be bothered by the aggravation.

  17. #17
    Featured Member maximvsv's Avatar
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    Default Re: Preapproved credit card offers

    Unless you're worried about the ability to get mortgage in the next year or so, request it to be increased to $5,000.

    Depending on what you want to use it to purchase, you also have the ability to use a whole separate credit ledger/history if you create a business. I even know a 'Nevada Corporation' scammer/promoter who uses it as part of his pitch.

  18. #18
    PhillyDancer1982
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    Default Re: Preapproved credit card offers

    Quote Originally Posted by maximvsv
    Unless you're worried about the ability to get mortgage in the next year or so, request it to be increased to $5,000.
    What if I was looking to get a mortgage in a year? Would raising my credit limit be a bad thing? Yeah a $5000 credit limit WOULD be a lot better for me, considering that I spend around $2000/month on credit card sometimes, which means paying down the card before I can use it again, and then paying it down again so that the statement reflects a low monthly balance(the statement's balance is what gets reflected on my credit reports and calculated into my credit score). I do not know if they'd do a big jump like that, though. Citibank seems kinda "cheap" and stingy.

  19. #19
    God/dess VenusGoddess's Avatar
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    Default Re: Preapproved credit card offers

    ^ Well, you can always ask.

  20. #20
    Featured Member maximvsv's Avatar
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    Default Re: Preapproved credit card offers

    If you are looking at getting a mortgage in the next year or next couple of years, then go see a mortgage broker, with a copy of your credit report, and ask how it would affect the process. Also, check with Trans Union or Equifax to see how the credit limit increase would affect your score, if at all.

    As for whether it can be done, it can. Credit card companies used to do that all the time with 21-25 y.o. people who had no job and no credit history. I haven't applied for one in years, though, so I don't know the current situation all that well.

  21. #21
    Featured Member Vamp's Avatar
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    Default Re: Preapproved credit card offers

    ok just for an fyi I found out how pre-approvals are done today.

    Credit Card companies send a list of criteria (ie credit score 650 and above, X number of years credit history, ect ) to the credit reporting agencies. The credit reporting agencies then send back a list of names. The credit card companies then send those names pre-approval letters. The pre-approval is not for the card itself. The pre-approval is to apply for the credit itself based on the information they recieve from the credit reporting agencies. The credit reporting agencies only send them list of names that meet the criteria, they do not send them your credit report.

    You can opt-out of receiving pre-approvals by calling the credit reporting agencies. This does not effect your credit score and is not considered an inquiry.

  22. #22
    God/dess Deogol's Avatar
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    Default Re: Preapproved credit card offers

    Quote Originally Posted by Vamp
    ok just for an fyi I found out how pre-approvals are done today.

    Credit Card companies send a list of criteria (ie credit score 650 and above, X number of years credit history, ect ) to the credit reporting agencies. The credit reporting agencies then send back a list of names. The credit card companies then send those names pre-approval letters. The pre-approval is not for the card itself. The pre-approval is to apply for the credit itself based on the information they recieve from the credit reporting agencies. The credit reporting agencies only send them list of names that meet the criteria, they do not send them your credit report.

    You can opt-out of receiving pre-approvals by calling the credit reporting agencies. This does not effect your credit score and is not considered an inquiry.
    So you are basically saying that one can actually apply for a card without pre-approval and one can apply for a card with preapproval... that in fact... preapproval is actually "marketing shit."


  23. #23
    God/dess FrustratedBunny's Avatar
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    Default Re: Preapproved credit card offers

    preapproved CC offers are bullshit. I get them all the time for great interest rates and stuff and I have filed Chapter 7 two years ago. I even get them all the time from Capital One and actually decided to try to get their card and they basically said HELL NO! When I filed Chapter 7 I owed Capital One $13k they never got from me. But yet I still keep getting preapproved offers. Your name is just on some list and that's why you get them.

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