Prequalification Explained: What It Means and How to Use It
Important: We are not a lender, and we don't make credit decisions. Express Approvals is an independent comparison and education site. Approval, rates and terms are set solely by each lender or card issuer, based on your application. No one can guarantee approval.
Prequalification lets you see whether you're likely to qualify, and roughly what terms you might get, before you formally apply. Used well, it saves you from unnecessary hard inquiries and from applying for products you're unlikely to get.
How it works
- You share basic information (for example name, address, income, and sometimes the last four digits of your SSN) on the lender's or card issuer's site.
- The lender typically runs a soft credit check, which doesn't affect your credit scores.
- You see an estimate: whether you're likely to qualify, and possible rates, amounts or limits.
- If you choose to proceed, you submit a full application, the lender verifies your information, and it usually runs a hard inquiry before a final decision.
Prequalified isn't approved
A prequalification is an estimate, not a commitment. The final offer can differ, or you can be declined, after the lender verifies your income, identity and full credit report. Treat prequalified rates as a starting point for comparison.
"Preapproved" offers in the mail
Lenders sometimes send "preselected" or "preapproved" offers based on a screen of credit bureau data. You'll still need to apply, and the terms aren't final until you do. You can opt out of prescreened offers at OptOutPrescreen.com, the official consumer opt-out site.
How to use prequalification well
- Check your own credit reports first for errors.
- Prequalify with several providers within a short window.
- Compare APR, fees, term, and total cost, not just the monthly payment.
- Only formally apply to the one or two best fits.
- Confirm the provider says "won't affect your credit score" for the prequalification step specifically.