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Pre-Qualified vs. Pre-Approved: Learn the Differences

Published December 11, 2024

4 min read

Table of contents

Key Points:

Credit card pre-approval and pre-qualification could provide an idea of your eligibility without affecting your credit score.
The auto loan and mortgage pre-approval processes are more rigorous and may affect your credit score.
Neither pre-approval nor pre-qualification guarantees final approval for a credit card or loan.

You may notice the terms “pre-qualified” and “pre-approved” on credit card offers in the mail or your email inbox. Whether you receive a pre-qualified or pre-approved offer, a lender has determined that you’re likely eligible for a new credit card or loan. While credit card companies sometimes use the terms interchangeably, they’re not the same. Learn about the differences between pre-qualification and pre-approval and how to proceed after you receive an offer.

What is a pre-qualified credit card offer?

If you’re interested in a credit card but unsure whether you qualify, you may be able to complete a pre-qualification application. Many credit card issuers invite applicants to check whether they pre-qualify for a credit card by completing an online form. You may have to provide basic financial information, like your annual income and monthly rent or mortgage payment.

Credit card issuers may also check your credit report through a soft inquiry. To determine whether you qualify for a Discover^® Card, checking to see if you’re pre-approved is fast, easy and won’t impact your credit score.¹

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What does a pre-approved offer mean?

While sometimes financial institutions might use “pre-approval” to mean “pre-qualification,” “pre-approval” is often a stronger indication that you qualify. If you receive a pre-approved credit card or personal loan offer, the lender may have pre-screened your credit report and compared it to their criteria.

Sometimes, credit reporting agencies offer lenders lists of people with credit reports that meet their criteria. Credit card issuers and other lenders may then contact consumers with pre-approved offers. Usually, these offers include specific terms based on your credit history and financial situation.

You could receive pre-approved offers by mail, phone, or email. Typically, the offers include terms like credit limits and interest rates, which could be ranges or specific figures. If you apply for an offer you’ve received, the card issuer must maintain those terms.

Mortgage and auto loan pre-approval

For auto or home loan pre-approval, you typically have to complete an application with a bank, credit union, or another lender. The application may include supporting documentation to prove your income. After you apply, potential lenders pull your credit report. If they approve your application, you should receive a pre-approval letter for a certain amount. This letter doesn’t guarantee approval—your loan application still undergoes a final underwriting process.

Because these lenders conduct hard credit checks, pre-approval applications for home and auto loans may bring down your credit score a few points. However, there are some exceptions to hard inquiries. If you have multiple loan inquiries in a short time, they might be treated as a single inquiry so you can comparison shop, according to the Consumer Financial Protection Bureau (but it will depend on the credit scoring model used).

So, pre-approval makes shopping around for the best fit possible without tanking your credit score.

How pre-qualified and pre-approved credit card offers impact your credit

Credit card pre-qualification and pre-approval don’t hurt your credit. To pre-qualify or pre-approve you, credit card issuers conduct a soft credit check, which doesn’t affect your score. However, if you choose to follow through with an offer, you might notice a slight decrease in your credit score as the credit card issuer reviews your credit report.

Apply for pre-qualified or pre-approved offers

If a pre-approved or pre-qualified offer sounds like a good fit, the next step is completing an application. You’ll likely have to provide information about your income level, savings, debts, and housing expenses to demonstrate your financial capacity. If you haven’t already provided your Social Security number for pre-approval or pre-qualification, the credit card issuer may request it.

Before making a final decision, the credit card company must complete a hard credit inquiry. They assess your credit file more closely for issues like missed payments or high balances. It’s a good idea to review the card’s interest rate, rewards, and credit limit after pre-approval to make sure it fits your needs before undergoing a hard credit check.

Did you know?

You can compare Discover credit cards to other industry-leading cards to find the right card for your financial needs. Review the types of rewards available and the premium benefits Discover offers on every card. Once you’ve found the best fit, see if you’re pre-approved.

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Pre-qualified and pre-approved won’t guarantee approval

Pre-qualified and pre-approved offers could help you understand your options. However, neither guarantees approval. Pre-approval is often accurate, but a card issuer could still identify a disqualifying issue on your credit report. The only way to know for certain whether you’ll qualify for a credit card, personal loan, mortgage, or auto loan is by completing an application. Still, pre-qualification and pre-approval offer assurance and direction—without risk to your credit score.

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