Wednesday, August 6, 2008
In the midst of you rebuilding your credit, you will be bombarded with junk mail from creditors. It goes a little something like this...."YOU HAVE BEEN PRE-APPROVED FOR UP TO $10,000" The key word is up to, you have to further read the small print below that states upon credit approval. You're probably wondering where did they get my information from? The creditor usually sends a set of minimum criteria to one of the three credit bureaus in preparation for a mail solicitation campaign. They request a list of consumers whose credit reports meet the qualifications. The bank may send a list of consumers obtained elsewhere (e.g. from a marketing database company) and have the bureau return a subgroup that matches the criteria. "Pre-approved" offers are then sent to everyone on the list. When you view your credit report, you may see inquiries that are designated as "promotional." This means that your file was checked for a "pre-approved" list, although it does not necessarily mean that you qualified to receive an offer. Since this type of inquiry was not initiated by you, it is not seen by other prospective creditors to whom you might apply, and will not reduce your FICO credit score. Well I recently received one of these pre-approvals in the mail. I figured I would apply since I am rebuilding my credit. I went online to apply, you get an answer within 60 seconds and this message that states "You have been approved! Your card will arrive in the mail soon." It didn't give me a credit limit or any other information. I receive the card in the mail the following week and lo and behold the credit limit was $250 with a $199 start up fee, which left my balance at $51! Are they crazy! Do they think I'm that desperate for a card that I will pay $200 for nothing? Needless to say I called the company immediately and kindly told the rep to cancel the card, at the same time cutting the card into a million pieces! Of course, she tried to reason with me with this script of how it's important to re build my credit and that this card would help me do it. She went on to compare paying the fees to paying college tuition. Gimme a break! She also said "Nothing is free, you have to pay." I'm thinking I have another credit card with a $2000 limit that I didn't have to pay any upfront fees! The morale of the story is to beware of these offers. READ everything in fine print and know how to discern these bogus cards from the real deal!!