Here Come Those Credit Card Offers!

Well, it’s that time of year again… that’s right, the mailbox is filled with credit card offers! Every day, it seems, someone is offering you yet another credit card, personal loan, or catalog card, and they all say one of two things: you’re either prequalified or you’re preapproved for their offer. But, seriously, do you know the difference between preapproved and prequalified?

In a nutshell, the difference between the two is as follows:

Prequalified means that you are likely to qualify based on your credit score and your demographics, meaning that other people with similar characteristics (credit scores, age bracket, etc.) typically do qualify, but you’ll need to fill out an application, allow them to run a hard credit check, etc., to get final approval.

Preapproved means that based on your individual credit score, you are likely to get final approval for whatever credit card sent you the invitation, but you will still need to allow them to run the hard credit check to get final approval.

So which offer should you accept? Truthfully, neither offer is a guarantee that you will get final approval, but the preapproved offer is probably the better of the two – either way, you’ll want to consider the individual offers before you make your decision, and even then, the interest rate, fees, and other terms may not be the best option for you.

It’s always wise to shop around BEFORE you apply for any type of credit! And it’s best to KNOW YOUR CREDIT SCORE before you start!

Want a Higher Limit on Your Credit Cards?

Ever wondered why your credit limit on your credit card is at whatever limit that it is? And how to go about raising that limit? Before the 2009 credit card reforms, it was fairly common to see people with excellent credit who had credit limits of $15,000, $25,000, or even $50,000 on some credit cards. Since then, credit limits have been scaled back so that the higher limits are usually around $5,000 or more, depending on your credit score.

Typically, those with a credit score over 750 are the ones who qualify for these cards, but there are also other tiers that most credit cards are based on:

850 to 781 (superprime): $9,543
780 to 661 (prime): $5,409
660 to 601 (near prime): $2,277
600 to 500 (subprime): $966
499 to 300 (deep subprime): $509

So, how do you get your credit limit increased?

Nearly every credit card company relies on your credit score to extend credit, but once you’ve been approved and have demonstrated responsible usage, the credit card company may utilize different criteria to determine if you’re eligible for a credit-limit increase. For example, they may ask you for updated personal information regarding your salary, they may look at your payment history (especially if you pay more than the minimum amount due), and they will likely look at your credit report.

Most of the time, assuming you have a solid history with a company, you’ll see “automatic” increases, but some companies don’t give automatic increases, and you’ll need to request an increase.

Bear in mind that requesting an increase can affect your credit score, just as having a higher credit limit that you’re utilizing to much of can also negatively affect your credit score, so use your larger credit limit just as wisely as you do the smaller one.