What Does Pre-Approved Credit Card Mean

Receiving a pre-approved credit card offer in the mail or seeing "pre-approved" when browsing online can feel exciting—but what does it actually mean?

What is a Pre-Approved Credit Card Offer?

A pre-approved (or pre-qualified) credit card offer means a lender has done a preliminary review of your credit profile and believes you're likely to qualify for their card. The lender has screened you based on certain criteria and is inviting you to apply.

Key Point: Pre-approved does NOT mean guaranteed approval. You still need to complete a full application, and the lender will conduct a thorough review before making a final decision.

Pre-Approved vs. Pre-Qualified: What's the Difference?

While often used interchangeably, there are subtle differences:

Pre-Qualified

• Based on basic information you provide

• Uses a soft credit check

• Less reliable indicator of approval

• Often the first step in the process

Pre-Approved

• Based on the lender's review of your credit report

• Initiated by the lender, not you

• More reliable but still not guaranteed

• Means you meet initial criteria

In Canada, most "pre-approved" offers are actually pre-qualified offers, though banks may use different terminology.

How Do Lenders Pre-Approve You?

1. Soft Credit Check
Lenders access credit bureau data to screen potential customers who meet their basic criteria without affecting your credit score.

2. Credit Screening Criteria
They look for factors like:

• Credit score within a certain range

• Income level (estimated from credit data)

• Low debt-to-income ratio

• Positive payment history

• Few recent credit inquiries

3. Marketing Lists
If you match their target customer profile, you're added to their marketing list and sent an offer.

What to Do If You're Not Getting Pre-Approved

Build Your Credit Score
Focus on making on-time payments, reducing debt, and maintaining low credit utilization.

Increase Your Income
Higher income makes you more attractive to lenders and opens doors to better cards.

Reduce Existing Debt
Lower your debt-to-income ratio by paying down balances.

Check for Errors
Review your credit report for mistakes and dispute any inaccuracies.

Consider Secured Cards
If you're rebuilding credit, secured cards or credit building programs may be better options.

Build Better Credit with KOHO

KOHO's Credit Building offers a safe way to build credit without the risks of traditional credit cards or lenders, helping you achieve the same goal: a stronger credit history.

With KOHO, you could:

• Have better credit in 4 months

• Build credit without a credit card

• See credit scores increase by an average of 31+ points in just 4 months¹.

KOHO reports your payments to Equifax on your behalf so you don't have to worry about it.

Understanding Your Options

Pre-approved credit card offers can be a good opportunity, but they're not a guarantee of approval or necessarily the best deal available. Take time to evaluate whether the card truly fits your needs and compare it with other options.

Remember, you're in control—you don't have to accept every offer that comes your way.

^{¹Based on users with a starting score of 500 or less and who signed up for credit building in October 2024. Credit Building is not a credit repair tool and does not guarantee an improvement in credit score. Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve scores and missed or late payments may cause credit scores to decrease. Outcomes may vary among users.}