The number of credit card users is growing exponentially. It is because a credit card helps you make big transactions seamlessly. Besides, the card lets you build a good credit history and get loan approval easily. Credit card agencies also try to entice customers in different ways.
So, have you received any emails or phone calls about the pre-approved credit card offers? Before responding to such communications, you should know what pre-approval means to a credit card holder.
What is a pre-approved credit card?
Many banks and financial institutions offer pre-approved products in order to lure customers. Pre-approved credit cards are appealing because they ensure instant processing. Besides, some pre-approved cards are available with a comparatively low interest rate.
So, if you find a credit card offer with a pre-approval facility, it means that the card issuer has analysed your creditworthiness. He has made a soft inquiry to learn about your monthly earnings, qualifications, and age.
How does a pre-approved credit Card work?
Many credit card issuers evaluate your credit history to determine whether you are eligible according to their criteria. So, if you have fulfilled their criteria, credit card issuers may call you or send a message about their offers.
- Banks and financial institutions where you have an account will contact you and persuade you to accept their pre-approved credit card offers.
- If you like their offers, you can send an application and receive the credit card. You need to provide some essential details to start the process.
However, every bank has different criteria for offering pre-approved credit cards. While some banks check the payment history, others focus on the current credit scores.
For instance, while applying for the Kotak pre-approved credit card, you should know about the eligibility criteria. You need to provide your name, Aadhaar number, contact details, and PAN number to send your application. While applying for the card, you will be asked to choose the type of credit card you want. Kotak811 Credit Card is a good choice, as it comes with many rewards. You will receive cashback offers and a 1% surcharge waiver on the fuel cost.
Must Read: How To Get A Credit Card Easily In 3 Steps
What are the advantages of getting a pre-approved credit card?
A pre-approved credit card from Kotak811 provides a range of benefits -
1. Streamline the process of applying for the credit card
Credit cards with pre-approved offers simplify the overall process. You do not need to be concerned about finding credit issuers and potential offers on credit cards. You will be able to apply for the pre-approved card from the online site of the bank. However, you should check the interest rates and other details before accepting the credit card offer.
2. Provide multiple bonuses
One of the advantages of having pre-approved cards is that they offer sign-up bonuses and other incentives. For instance, you may get amazing rewards for travel and dining.
3. A low interest rate
Pre-approved cards are better than standard credit cards because of the low interest rate. You can also lock in the interest rate to save money in the future. If you have a high credit score, you will be eligible for attractive interest rates
4. Improve credit status
With pre-approved cards, you will have the opportunity to build a good credit score. You need to manage your credit efficiently to develop a high credit score. The credit card provider may provide a card with a comparatively low credit limit, although your credit score is not good. However, you must pay your credit card bills on time because it will boost your credit health.
Does a pre-approved credit card affect your current credit score?
When you get a pre-approved card offer, it signifies that the credit card provider has some idea about your latest credit status. But they have not thoroughly analysed your report. Thus, an issuer makes a soft inquiry before offering one of the credit cards like the Kotak811 credit card. It does not affect your score in any way. However, if you have responded to the offer, the issuer will make a hard inquiry. A number of hard inquiries can affect your credit health.
Must Read: Disadvantages Of Having A Bad Credit Score
Can an issuer decline your application for a pre-approved credit card?
If you have applied for the pre-approved card, you can expect three possible results-
- You will receive the card if you have met the criteria provided by the card issuer.
- You may be eligible for a credit card with less attractive terms.
- There is a risk of having your application rejected.
But why do issuers reject some pre-approved card applicants? When the credit card issuer checks the credit status, they find a low score. Even a single late payment may disqualify the applicant from getting the pre-approved card. So, you should maintain a high credit score even if you have received a Kotak Pre-Approved Credit Card offer.
Other things that you must know about credit card pre-approval
1. Interest-free or lifetime credit card offers are promotional strategies to lure customers. But they have only limited validity.
2. The credit card issuer lowers the annual charge for the card for a temporary period.
3. You should check the credit card’s expiration date and go through the terms and conditions. The contract outlines the duties of the customer and the issuer. It also shows the charges related to the card.
Conclusion
Credit card pre-approval is a good sign because it shows your good credit history or high credit score. Some credit card issuers also check your employment history before providing the pre-approval offer.
However, getting a pre-approval offer does not mean you will receive the card instantly. The card issuer will start processing your application after you respond to their offer. There is a risk of rejection if your credit score goes down. Thus, you can proceed with the offer only after considering your financial status.
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