We’ve all gotten pre-approval letters in the mail stating that we are pre-approved, for example, for a $10,000 credit card, requiring only a signature to seal the deal. The real reason behind how the credit companies know to send these to you is that they have run a soft credit inquiry on you. This soft inquiry tells them that you have good enough credit to potentially qualify for their card. It will not tell them your income, job status or whether you can afford this new extension of credit. Running this soft credit inquiry will not, in itself, affect your credit score. What will affect your score is if you decide to take them up on the offer by filling out their form and sending it in. What you are then essentially doing is giving them the right to pull a hard inquiry on your credit. This will affect your score roughly five to six points. You are not necessarily assured of getting approved for the card, but now that they have run your credit, they can determine if you fit their criteria. So my suggestion is to be very careful on filling out these pre-approval offers. Make sure you absolutely need or want the card. After you close your loan is really the best time to apply if you want the card because it doesn’t matter at that point if your credit score goes down five or six points.
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