"Pre-Approved" and "Invitation-to-Apply" offers are frequently found in your mailbox. What's the difference between the two?
Lenders know that mail offers for credit cards, mortgages, personal loans, auto loans, and other credit related products are highly effective in gaining new customers. However, not all offers are the same!
Some offers are pre-approved or pre-qualified meaning that within the guidelines of the Fair Credit Reporting Act (FCRA), the lender has guaranteed they will honor the offer. On the other hand, some offers are worded similarly but include the, "apply." These invitations to apply are aimed at getting you to apply for their loan or credit card without any sort of firm guarantee.
Prescreen credit data is purchased by lenders from one or more of the three major credit bureaus. These include: Equifax, Experian, and TransUnion. The lender can select a variety of criteria to qualify who their offer recipients. Most lenders use criteria that includes credit score, open loan/card balances, payment history, types of existing credit, and many more. Having this information ahead of making a firm offer of credit is crucial, as they have now deemed the consumer worthy of a loan or credit product. Based on the FCRA requirements to use credit data for marketing purposes, a firm offer is then required by the lender which must include a statement of pre-approved, or pre-qualifed.
Invitation to Apply offers are more common, and often don't require as much scrutiny. Credit Data has not been used to select who receives the offers to apply, and the FCRA requirements do not apply. The lender has usually made some selections based on demographics, lifestyles, household incomes, home values, or other attributes, but it doesn't mean you'll be approved for a loan/card.
If you receive an offer in the mail and wonder which it is (they can be tricky sometimes) the FCRA will require "opt out" language in a true pre-approved offer so that you can no longer receive future offers and include language about how your name was acquired through a Credit Bureau. This information will always be in an outlined box at or near the bottom of the offer. Read more about this by clicking "HERE" to go to FCRA Summary of Rights.
Altair Customer Intelligence is an authorized agent and reseller of Credit Bureau data and we work with various lenders to help them to find the best prospects to make their offers. As a consumer, we help you to receive less "junk" mail and instead receive more relevant offers. As a marketer or lender, we help improve the results of their mailer by finding the best and most qualified prospects , whether they are pre-approved offers or invitations to apply!
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