It may not feel like it as you stuff a new batch of junk mail into the "to shred" pile, but having a mailbox flooded with preapproved credit card offers can be a good sign.
Credit card issuers routinely send attractive card offers to consumers with good to excellent credit. Therefore, when you receive these types of offers in your mailbox, it usually means credit card issuers believe you to be a good credit risk and want to do business with you.
Why do card issuers mail those pre-approved offers?
If you receive pre-approved offers in the mail, you're certainly not alone. Credit card issuers are always hunting for new customers who meet their qualification criteria. Billions of promotional letters -- a.k.a. pre-approved offers of credit -- are mailed out by credit card issuers every year.
Why do card issuers mail so many pre-approved offers of credit? Because it works. By prescreening applicants, card issuers can, for the most part, avoid advertising to people who are likely to be turned down for their product. The result is a much smarter, more cost-effective, and targeted advertising campaign.
How does prescreening work?
Selling your data is the primary way the three credit bureaus make money. Credit reports are probably the most universally recognized "product" the credit bureaus sell. Yet, there are several other ways the credit bureaus can profit off the sale of your information.
Prescreened lists are another revenue generator for the credit bureaus. So how does prescreening work? When a credit card issuer wishes to purchase a prescreened list of consumers for prospecting purposes, they begin by providing one of the credit bureaus with what's called "selection criteria."
The card issuer might, for example, want to purchase a list of consumers (names and addresses) who meet requirements like:
- Residing in a specific state
- A credit score of 720 or higher
- No late payments on file in the past 24 months
- No bankruptcy present on credit reports
If your credit information matches the card issuer's selection criteria, then a pre-approved offer may find its way into your mailbox.
Does prescreening hurt your credit score?
That prescreening process does not harm your credit scores in any way. Yes, a portion of your credit information may be accessed during the prescreening process. And, yes, a promotional inquiry may be posted on your credit reports.
Such inquiries, however, are known as "soft inquiries." They don't have any impact on your credit scores. In fact, only you can see them -- not any lenders or credit scoring systems.
How do you opt out of receiving these offers?
Pre-approved credit card offers might be a good sign that your credit is healthy -- and they can even be a source of juicy signup bonuses. But that doesn't mean they're welcome in your mailbox. Nobody loves junk mail.
Even though prescreening doesn't harm your credit scores, you have the right to prevent your credit information from being accessed for prospecting purposes. Whether you don't like the idea of credit card issuers (or others) being able to access your information without prior consent or you simply hate the ecological waste it creates, you can put a stop to it.
You can opt out of receiving future pre-approved offers by visiting OptOutPrescreen.com. Fill out a simple form online and you can opt-out for five years. You can also print and mail in a request if you wish to opt-out permanently. If you ever change your mind, the same website will allow you to opt back in as well.
There's an additional benefit to opting out if you choose to do so: Fewer credit card offers in your mailbox means fewer credit card offers that can be stolen by fraudsters. And while opting out certainly won't prevent you from being a victim of fraud, it will at least reduce your exposure.
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[This article was first published on The Simple Dollar in 2020. It was updated in March, 2022.]