Has your mailbox recently been bombarded with enticing credit card offers? Their pickup lines may be anything from “You’re pre-approved,” to “You’re invited to apply,” to “You’ve been pre-screened” or even “You’ve been pre-selected”
Whether you’re flattered or simply annoyed, here’s how to read between the lines of these offers — and why you’re getting so many.
The wording makes a difference
Credit card mailings fall into two categories, explains Kevin Haney, a former sales director at a big-three credit bureau who now shares in industry insights at SavvyOnCredit.com.
“Either credit information was used to determined who got that piece of mail, or it wasn’t.”
Situation #1 — Credit information was used: These are your “preapproved,” “preselected” or “prescreened” mailings, although different wording might be used.
Before sending you these offers, the issuers have looked into your credit history, says Lisa Hronek, research analyst at marketing research firm Mintel Comperemedia.
“They want someone who is going to use the card, but also pay it responsibly,” Hronek says.
So how do issuers check your credit? They turn to the consumer credit bureaus with a list of credit-related must-haves – or must-not-haves.
“They might say, ‘we don’t want anyone who’s bankrupt, and we don’t want anyone who’s more than 90 days late today,’ and the list goes on and on,” Haney says.
Issuers look at your credit scores, too, Haney says — your FICO scores, or any of the hundreds of other custom scores out there.
The credit bureau then responds to the issuer with a list that contains only the consumers who fit the desired credit history and score profile.
“[Issuers] don’t want to spend money printing out envelopes, paper and postage, and mailing offers to people who are never going to qualify,” Haney says.
Situation # 2 — Credit information was not used: Because such offers often use the language “Invitation to apply,” the industry short-hand for them is ITA.
“The invitation to apply is a very general mailing, and the recipient’s credit file has not been looked at to determine creditworthiness,” Hronek says.
Instead of checking credit, issuers determine who gets ITAs based on things like magazine subscriptions, gift registries and club memberships (which they buy from the companies that maintain those lists). Sometimes an airline card issuer will send them to people who are part of the affiliated airline’s frequent flier program.
So which type is the offer in your inbox? Issuers can get creative with their wording, so it can be hard to tell. But one clue, Haney says, is whether the offer contains a prescreen opt-out notice – fine print that explains how you can opt out of prescreening, an option required by the Fair Credit Reporting Act (FCRA). Offers that stemmed from a credit check (No. 1 above) are required to include this notice. Offers that stemmed from other sources (No. 2 above) are not.
Here’s the prescreen opt-out notice on a recent offer that landed in my mailbox:
Will I really get the card?
When you apply for a card, the issuer will perform a hard credit pull, which will temporarily dock your credit score. So credit card mailings are often regarded with some suspicion. After all, what if you apply only to get turned down?
What many consumers don’t know, Haney says, is that offers that stem from a credit check (ie, prescreened offers) must contain a firm offer of credit. That’s required by the FCRA, which seeks to balance the modest invasion of consumers’ privacy (which occurs when an issuer asks the bureaus to check their credit) with a tangible benefit (a firm credit offer).
Here’s the wording in the FCRA:
And here’s what “firm offer of credit” means for you: Remember those criteria the issuer sent to the credit bureau when it asked for help in finding desired consumers? When you apply, if you still meet those criteria, the issuer can’t rescind the offer.
The key phrase, though, is, “if you still meet those criteria.” That may no longer be the case if you let the offer sit for a while.
“The offer gets mailed out, it arrives in the mailbox and it might sit on the kitchen table for a month before the person responds,” Haney says. “So the consumer sends back a response, and the bank will pull a credit report to verify that nothing has changed.”
If you fail to meet the original criteria the issuer presented to the credit bureau, it can turn you down. For example, say the issuer asked the bureaus for a list of people who have no accounts that are 60 or more days late. If you’ve since become 60 days delinquent on another card, you can get turned down.
The good news: If you still meet the original criteria (and apply by the deadline in the offer letter), the issuer has to honor the offer. It still has a little wiggle room, though. Credit card offers sometimes contain ranges of APRs. When you apply for the card, that credit check will determine which one you get. And it might be higher than what you’d hoped.
“They do mention that in the fine print of the offer, and you’ll often see phrases like ‘depending on creditworthiness,'” Hronek says.
As for the invitations to apply, those never involved a credit check, so the issuer can turn you down for any reason. In fact, Haney says, most people who respond to invitations to apply are turned down. First of all, there was no creditworthiness check before the offer was extended, so large numbers of people getting the offer aren’t qualified. Second, those with credit problems are more likely to apply for new credit – because they need it.
“The more desperate they are, the more likely they are to respond and the more likely they are to have a negative credit history,” Haney says. “That’s been a well-established phenomenon in the banking world for a very long time.”
Why am I getting so many offers?
Despite the sheer volume of credit card offer mailings, the number of people who respond is comparatively tiny.
“Over ninety-nine percent of people get the offer and throw it in the trash, and the last that’s ever heard of them,” Haney says.
So issuers are always trying to find consumers who are not only creditworthy, but who are also likely to respond to offers. That can be difficult because, as Haney says, “usually, people with the best risk scores respond the worst, and people with the worst risk scores respond the best.”
If you’re getting mailboxes full of offers, you may be in that “sweet spot” between having good enough credit and being likely to apply for a new card.
“That’s a very, very small portion of the population,” Haney says. “So the people who get preapproved offers tend to get a lot of them.”
Life events may also be a trigger for more offers. If an issuer is targeting new home owners, and a mortgage just appeared on your credit reports, that could explain why you’ve suddenly become so popular.
Of course these complex selection processes can have humorous results – you may have heard the stories of babies and dogs getting preapproved for cards.
“Pets, children and even the deceased sometimes get preapproved offers,” Haney says. “The systems are not perfect, and the challenge of consolidating data from thousands of sources is far more complex than people realize. It happens very rarely, but garners lots of media attention and consumer derision when it does.”
How do I make them stop?
Perhaps you consider credit card offers junk mail. Perhaps you worry about identity theft (although both Haney and Hronek point out that no sensitive information, such as Social Security numbers, is included on credit card offers). Or maybe you just don’t want issuers checking your credit. Whatever your reasons, you can opt out of offers – or certain types, anyway.
There’s not much you can do about invitations to apply. But you can stop offers of the prescreened variety. Just go to OptOutPrescreen.com, and fill out the required forms to prevent the credit bureaus from including you on the lists they provide issuers.
“This was offered to give consumers the option of preventing issuers from looking into their credit files,” Hronek says. “So that’s a way to cut down on those mailings if you like.”
Updated February 10, 2016