How Pre-Approved Credit Card Offers Hurt Your Credit Score
Lucky you! You got a pre-approved credit card offer in your mailbox! Zero interest for six months on new purchases! Transfer those balances from high-interest cards (for a small fee) and save!
Before you fill out that credit card application, however, you may want to consider how pre-approved credit cards can actually hurt your credit score. Here are the good, the bad, and the ugly truths about pre-approved credit cards.
Preapproved cards: The good
Responsibly using credit cards is one way to build a good credit history. As you pay your bills on time and manage debt wisely, you prove that you're a good credit risk, which will be reflected in your credit score. A good credit score is the gateway to better mortgage terms and lending offers.
Preapproved cards: The bad
However, your payment history is only part of the credit score picture. The national credit rating companies (TransUnion, Equifax, and Experian) also look at how frequently your credit rating history is accessed by lenders.
Pre-approved credit card offers come in the mail because some lenders purchase your credit history from these national rating companies. These lenders review thousands of credit histories and market cards to people who fit their lending profile. Ordinarily, this review doesn't affect your credit score.
Nevertheless, everything changes if you fill out the credit card application form. If you respond to pre-approved credit card offers, the same lender that profiled your credit history will do so again, and this time the review does hurt your credit rating. Furthermore, a credit inquiry will remain on your credit history for one year.
- Don't apply for more than one pre-approved credit card at a time. Every time you fill out the credit application form, you drop your credit score by a couple of points. If you must get multiple pre-approved credit cards, don't apply for more than one per year.
- Don't apply for pre-approved credit cards if you're planning to buy a house in the next 12 months. When you shop for mortgages, every point on your credit score counts.
Preapproved cards: The ugly
Sometimes, those pre-approved credit card offers give you a little more than you expected. Identity thieves and con artists often send out phony pre-screened credit card offers so they can hijack your identity. Once they have your personal information, they can apply for real credit cards and rack up charges in your name.
Protect your credit score
Fortunately, you can protect your credit score and shield your personal information from unauthorized use with FreeScore.
Shred pre-approved credit card offers. They hurt your credit rating and can open the door to identity theft. If you want a credit card, your best option is to apply for one through your bank. You'll tend to get better rates and a little more peace of mind.
FreeScore.com is a destination site for an increasingly credit-conscious public. The site offers immediate access to credit scores, reports and monitoring as well as educational information and tips on how to safeguard one's credit and identity.
Article Source: ArticlesBase.com
