Do Preapprovals Affect Your Credit Score?

If you’re over 18, you’ve probably received a ton of mail with preapproved credit card offers and preapproved mortgage offers, and so you may be wondering do those preapprovals affect your credit score? We will answer this question in much detail below.

Do Preapprovals Affect Your Credit Score?

Pre-approvals for credit cards and loans do not affect your credit score. This is so because preapprovals only result in what is known as a soft inquiry since a person who receives a preapproval did not actively apply for a credit card or loan. That said, if you follow up on a preapproval and actually apply for the advertised credit card or loan, a hard inquiry will be placed on your credit report and it will affect your credit score. On the other hand, a mortgage preapproval may slightly hurt your credit score as a hard inquiry is usually placed on your credit report by the loan officer pre-approving you for a mortgage loan.

A hard inquiry, commonly known as a hard pull, is placed on your credit report whenever you apply for credit cards, home loans, auto loans, and personal loans. A hard inquiry can lower your credit score by a few points and remains on your credit report for 2 years from the date your lender or creditor checks your credit report. After the 2 year period, the inquiry is automatically removed from your credit report.

Just to reiterate, preapproved credit card and loan offers that are sent to you will never appear on your credit report and will not affect your credit score unless you act upon such offer and proceed to apply for the advertised loan or card.

If you receive a preapproved offer in the mail or via email, a soft inquiry is performed. A soft inquiry does not appear on your credit report and has no impact on your credit score. A soft inquiry, for the purposes of preapproved offers, refers to the situation where a creditor accesses a copy of your credit report to pre-approve you for an offer.

If you do not act upon the preapproved offer, a hard inquiry will not be added to your credit report and the offer will have no impact on your credit score.

However, if you act upon the offer and apply for the pre-approved offer, the lender or creditor may approve you based on the pre-approval without performing a hard inquiry, however, most creditors will perform a hard pull and a hard inquiry will be added to your credit report upon applying for the advertised credit card or loan.

Opting Out of Pre-Approvals

If you do not want to receive pre-approved offers, federal law provides you with the option of opting out for such offers for five year or permanently. If you choose the 5 year opt out option, you won’t receive any pre-approved credit cards or loans for 5 years. If you opt out permanently, you will never receive any pre-approved credit card, loan, and insurance offers.

Mortgage Preapproval vs Pre-Approved Credit Cards & Loans

Card issuers and lending institutions that pre-approve person for credit card offers and loans do so by screening millions of people and selecting a group of people who meet certain criteria to apply for either a credit card or loan. When a lender or creditor checks your credit report to approve you for such an offer, a soft inquiry is performed and has no effect on your credit.

This is different from mortgage pre-approval, which usually involves a person going to a bank to have a loan officer look over his or her financial history, including conducting a credit check to get pre-approved for a home loan. Mortgage pre-approvals often involve a hard inquiry since a loan officer wants to see an applicant’s credit history before approving him or her for a home loan.

So, while a credit card pre-approval will not hurt your credit score, a mortgage pre-approval may have a small effect on your credit score as a hard inquiry is placed on your credit report as a loan officer requests a copy of your credit report to go over your credit history to pre-approve you for a home loan.

That said, a single hard inquiry is likely to drop your credit score by 5 to 10 points. So, you should not worry too much about it. Your credit score will likely recover within 12 months of the inquiry being placed on your credit report. Within 2 years, the hard inquiry will automatically be removed from your credit report.

Credit Score Planet Frequently Asked Questions

1. Does mortgage preapproval affect your credit score?

Yes, a mortgage pre-approval does hurt your credit score because loan officers will typically check your credit score to pre-approve you for your home mortgage. They do this because they have to check your financials to ensure that you’re in good financial shape to receive a home loan.

2. Do preapproved credit cards affect your credit score?

No, pre-approved credit cards do not hurt your credit score because you’re not applying for credit, a card issuer is simply looking over your credit report to determine whether you meet certain criteria to pre-approve you for a credit card. However, if you respond to a pre-approved credit card offer or apply for a credit card, your credit score will be affected as a hard inquiry is placed on your credit report.

3. Do pre-approvals hurt your credit?

Mortgage preapproval may hurt your credit score slightly as a loan officer checks your credit report. However, pre-approved credit cards do not hurt your credit score.

4. Can I get a pre-approval without a credit check?

In most cases, for a lender to pre-approve you for a home loan, they will have to check your credit report and credit score.