Did you go through your mail and see that a bank has sent you a notice, according to which you’ve been pre-approved for a loan? They also say that you only need to send back a mail with the card or just contact them by phone.
Wondering what’s all about? It might be a credit card company that has sent an unsolicited notice to inform you that you are pre-approved for a loan. Or it might be a notice you got after asking for a pre-approval.
Unsolicited Notices of Pre-Approved Loans
A lot of these notices are just marketing ploys. By sending these notices to thousands of people, credit card companies could get some clients to sign-up for the credit cards. In most of the cases, the pre-approval isn’t really activated, even though it said so on the notice. They might have just pre-qualified you and you will still have to get the approval afterward.
To qualify for the pre-approval, you will still have to give them the details they ask and if you meet their criteria, you will have the approval.
Some notices might come from rate lenders that have high interest. Always read the terms and conditions before considering getting such a loan. Usually, an unsolicited loan might cost you a lot more, and it might be aimed exactly at those that have a low credit score or a bad credit.
Make a Purchase With a Pre-Approved Loan
It’s easy to make a purchase when you have a limit, set by the bank, or any other lender. The lender will loan you as much money as you can afford to give back, based on your income or other debts.
So, if you’re looking to buy something, but you only got approval for £150,000, you will not look for something more expensive than that.
When you receive these notices of loan pre-approval, you must ask yourself the following questions:
1. Do I need a loan or a credit card?
2. Would I get a loan if I have poor credit?
3. What terms and conditions does the offer have?
These notices will not leave an inquiry of a footprint on the credit file, thus it will not affect the credit score you have. But as soon as you send back the form completed with your details, the lender will start inquiring your credit.
Each filled in pre-approved notice that you send back will lower your credit score with 10%. It can happen even when you accept to apply for a store credit card to get 10% discount for that day’s purchases, leaving a footprint and reducing your credit score.
So, it’s easy to accept such offer, but they come at a cost that will affect your credit score and chances of getting a bigger loan when you actually need it.