I saw a turning point in the journey to attainment and maintaining of excellent credit when I began to receive a number of pre-approval notices in my mailbox, however I didn’t expect to quickly receive a pre-approval offer for the Discover It Card. Home mortgages, lines of credit, uncured credit cards, it seems the lenders all wanted my business. It’s a heart warming feeling to know that once you were unattractive to lenders and all of a sudden, after a few months of dedication, you now returned to the place of being courted by lenders. Truth be told, while the initial pre-approval notices made me happy, I initially placed the pre-approval offers in my trash can because they weren’t attractive enough.
Not only were the lenders so far removed from the big named financial institutions, many offers I received still managed to maintain ridiculously high APRs, annual fees, and fees for any and all transactions. From my understanding, credit issuers were remaining conservative with their risk criteria for credit card approvals, so I hypothesized only those with higher credit scores are likely going to be solicited for pre-approvals. While I knew the sudden receipt of credit card pre-approval notices indicated my credit score was rising, the quality of offers reminded me my scores weren’t where I wanted them to be in order to take advantage of the benefits of big name pre-approval notices. I wanted a card without an annual fee. I wanted low APRs, and finally I wanted some sort of rewards for simply using the cards.
I also know pre-approval notices aren’t exactly guaranteeing you will actually be approved for the line of credit. Although it sounds counterintuitive, the terminology is in fact misleading. Because you still have to apply for the form of credit, there is always a chance you will be denied therefore deeming it a pre-approval notice can give the false impression that you will actually be approved even if you utilize the indicated invitation number.
One day, I came home and noticed a pre-approved notice for the Discover IT card. Now I haven’t gotten into detail about my 2014 vision board, but one of the financial focus for the year is to reach and maintain at least a 750 FICO score. In order to attain the score, I knew I’ll need to significantly increase my credit limit and show I am able to carry a balance on a card without missing monthly payments. Suffice to say, the Discover IT card seemed to be able to help me reach the goal. As I looked into the Myfico community forum, I realized the Discover It card is an exceptional cash back rewards card for the following reasons:
- 0% Intro APR for 18 months on balance transfers – Non applicable as I am not transferring a balance.
- 0% Intro APR for 14 months on all purchases – Helps my goal of carrying a small balance for a few months.
- 5% cash back on rotating categories - 5% cash back for all purchases in various categories that rotate throughout the year such as restaurants, department stores, home improvement and others. The maximum you’re allowed to receive is $1,500 in bonus category spending per quarter.
- 1% cash back on all other purchases – Use the card and earn cash back. Nothing to complain about here.
- 5-20% extra cash back on bonus when shopping through the Discover online mall – Not only to you receive cash back on everyday purchases, but you are also able to increase the cash back awarded by shopping directly through their online portal. I am surprised to see Target, Walmart, Macy’s, Ulta and other frequently patronized stores here.
- Almost no fees of any kind – Yes. No annual fee, no fee for the first late payment, no overlimit fee, no foreign transaction fee, no pay-by-phone fee, no change to APR for paying late or going over credit limit.
- Free FICO Credit Score on monthly statements (given by TransUnion) – Now this is invaluable. Since almost every credit score website on the interwebs offer imitation FICO scores, the ability to get your genuine FICO without paying can’t be found elsewhere. I’m only aware of two websites are licensed to sell real FICOs (MyFICO and Equifax) and they both charge $19.95 each time you check it.
- $0 Fraud Liability Guarantee - You didn’t purchase the item, no worries.
- Extended Product Warranty - Extends the terms of the original U.S. manufacture’s warranty.
- Purchase protection - Covers eligible purchases up to $500 if they are damaged or stolen within 90 days of purchase.
With all the benefits of the card and zero annual fee, I didn’t have to ponder long and hard about the pre-approval offer. My only concern was if I would really and truly get approved for the card. I decided to determine which credit bureau the credit insitution utilizes to see if it would be actually worth applying. While credit card companies tend to rely on one bureau over another, the credit bureau they use also changes depending on what state you live in and which specific card you apply for. I utilized Creditboards.com’s creditpulls database to help me determine which agency would generate a credit report for Discover. I found Discover had the tendency to pull Experian for Illinois residents. Being Experian is my stronger score out of it, TransUnion and Equifax I decided to apply. I entered in my invitation code, said a quick prayer and 10 seconds later I received the following notice:
Not only was I approved for the card, my unsecured credit limit for the card is $5,000! The Discover It card increased my reserve of available credit from $500 to $5,500!
Now while I’m extremely happy this pre-approval application worked out in my favor, I’m also aware that this is the only offer I decided to take advantage of out of the many that have landed in my mailbox. I also took advantage of this offer because the benefits of the card were directly in line with my financial goals. The pre-approval notice also included an invitation code. I understood this as the credit company as already having evaluating my profile and there were increased chances I would qualify for the card.
The Risks of Responding to Pre-Approved Credit Card Offers:
- Reduction of average age of accounts – Given you are approved for the new credit card, your credit time frame will decrease because you are adding a new credit obligation to your credit reports. Adding many new sources of credit within a short timeframe will have an even greater and detrimental impact on your credit score.
- Generally speaking, the periodic opening of a new credit card by a consumer with an already decent credit score will likely have a relatively small impact on the score.
- Not all credit card offers you get in the mail are pre-approvals. Some may be invitation to apply offers, which are essentially marketing ploys and invites you to apply without any prior screening of your credit profile.
While there are benefits of pre-approval notices, there are also risks. If you are considering responding to a pre-approval notice, I recommend remaining careful and to always read any terms and conditions and finally, only apply for credit when necessary.
Have you ever applied for a credit card after receiving a pre-approval notice? Do you use credit cards?