New to credit cards and confused by the terms “pre-approved” and “pre-qualified?” Don’t worry, you’re not alone. Today, I will break down exactly what pre-approved cards are, how to improve your chances of getting one, and the key differences between pre-approved and pre-qualified credit card offers in India.
What is a Pre-Qualified Credit Card Offer?
Generally, when you need a credit card, you apply through a bank’s app, net banking, or by visiting a branch. However, sometimes, the bank may call or notify you about pre-qualified or pre-approved credit card (or even loan) offers.
Pre-qualified offers are based on a surface-level assessment of your creditworthiness. Banks review your credit report to know if you meet their basic criteria for a certain card. You can then choose to apply for the card. The bank will still run a hard credit check and may request more information or documents.
Think of it as an invitation to apply for the credit card—a personalised ad enticing you to consider their offer.
What is a Pre-Approved Credit Card Offer?
Pre-approved offers generally mean you are approved for the credit card. Banks conduct a thorough check of your credit report and other available data, such as existing relationships with the bank (savings account, fixed deposit, etc.), your credit score, income, cash flow, and spending habits. Based on this assessment, you are likely to be approved when you apply for the card.
Think of it like a table reservation at a hotel— it holds your spot but doesn’t guarantee you’ll get the table. Similarly, pre-approval doesn’t guarantee final approval for the credit card. The bank may still reject your application if they find discrepancies or issues during their evaluation of your credit and profile.
Pre-Qualified vs. Pre-Approved: Key Differences
This table shall give you a clear understanding of pre-qualified and pre-approved offers, their differences and your next steps if you receive either.
| Feature | Pre-Qualified Credit Card Offer | Pre-Approved Credit Card Offer |
|---|---|---|
| What is it | Invitation to apply for a card based on a preliminary assessment of your creditworthiness. | Indicates a higher likelihood of approval as it’s based on a more thorough assessment. |
| Credit Check | Soft inquiry (does not impact credit score) | Soft inquiry, but sometimes a hard inquiry may be done for a firm offer. |
| Information Required | Basic financial information. | More detailed financial information may be required. |
| Approval Guarantee | No guarantee of approval. | Higher chance of approval, but still not guaranteed. |
| Next Steps | Weigh the pros and cons of the offer and decide whether to apply for it. | If the offer meets your needs, complete the application process and await final decision. |
| Example | Receiving an email with a “pre-qualified” offer for a travel credit card. | Receiving a letter stating you’re “pre-approved” for a specific card with a set credit limit. |
Increase Your Chances of Getting Pre-Approved Credit Cards in India
While there’s no guaranteed way to receive a pre-approved credit card offer, here are some tips that can increase your chances:
- Maintain a Good Credit Score: A CIBIL score of 750 or above is considered excellent in India. Pay bills on time, keep your credit utilization low (ideally below 30%), and avoid taking on excessive loan. You can check your credit score for free through various online platforms and apps.
- Build a Relationship with Your Bank: Having a savings or current account with the card-issuing bank can work in your favour. Maintain a healthy account balance, consider investing in fixed deposits (FDs), and utilize their other financial products (but only if they align with your financial needs, not solely for getting a credit card).
- Demonstrate Stable Income: A steady income, especially if your salary account is with the same bank, significantly increases your chances of receiving a pre-approved offer.
- Shift Spending to the Desired Bank: If you frequently use your debit card for online shopping and other discretionary expenses, consider switching to the bank you’d like a pre-approved offer from. This shows your spending potential which makes up for a potential card customer.
- Stay Updated: Regularly check your bank’s mobile app, net banking portal, and email for any pre-approved or pre-qualified offers.
By following these tips, you can potentially attract more pre-approved credit card offers from banks in India. In fact, I personally received a pre-approved Moneyback credit card offer from HDFC Bank within three months of opening a basic savings account and maintaining a healthy balance, which also triggered an upgrade to their Classic program.
Know Your Offer
I hope this guide helps you understand the nuances of pre-approved and pre-qualified credit card offers. Remember, a pre-approved offer means you’re likely to get the card. If it aligns with your spending habits and comes with perks like discounts, lounge access, or is free of annual charges, definitely go for it.
However, if there is an annual fee, weigh the cost against the potential benefits. If you’re looking for a particular card (perhaps from a different card category) that hasn’t been pre-approved yet, consider waiting. The bank might eventually extend a pre-approved offer for that card, or you can always apply for it directly later on.
Now that you know the ropes, why not check your banking app to see if you have any pre-approved offers waiting for you?
I’m a bit of a credit card geek. Ever since I got my first card in 2018, I’ve been obsessed with finding the best deals, earning rewards, and boosting my credit score. I’m a tech guy at heart, but my love for all things personal finance has led me down this credit card rabbit hole. I also dabble in banking, investing, and other money matters.