Turned down after being preapproved

Dear Experian,

Why am I being told that I have been approved or have been sent preapproval letters and then am shot down?



Dear GTH,

The reason is probably that between the time the preapproved offer process began and the time you received and responded to the offer your credit history changed causing you to no longer qualify for the offer.

The process of making a preapproved offer can take many months. It begins with a lender, such as a credit card provider, developing a list of credit history criteria that must be met for the offer to be extended. Those criteria are then provided to Experian.

The lender either provides a list of potential customers or asks for customers within their market area. Experian enters the criteria into its credit reporting system, which then compares the criteria to those consumers in its credit reporting databases. Through an automated process, a mailing list of people who meet the criteria is generated.

The lender specifies how many people they want to receive the offer, often hundreds of thousands or even millions of individuals. The list of names and addresses is then delivered to the lender, or more often directly to a mailing or marketing service specified by the lender. The service company then delivers the offers. No person actually looks at a credit report during that process.

The list of names may be held for a time during processing before the offer is actually delivered. When received, you have the choice to accept the offer by completing an application for the lender.

It may be a matter of weeks or even months from the time the preapproved offer is prepared to the time you accept it. During that period, changes may occur in your financial life that cause you to no longer meet the criteria for the preapproved offer.

When you submit the acceptance form, you are applying for credit. Federal law allows the lender to check your credit history again at that point to ensure you still meet the criteria for the offer. If you do not, the lender can revise the offer or rescind it.

We suspect that is what is happening in your case. Something changed in your credit history between the time the offer was preapproved and the time you returned the acceptance form.

A second possibility is that you are confusing preapproved offers with “invitations to apply,” which can be an easy mistake to make. While they can look very similar, invitations to apply are quite different. An invitation to apply is exactly that. You are being invited to apply for a credit card or loan. There has been no prescreening of your credit history and you are not preapproved.

Returning the invitation is the same as applying for credit. The lender will review your credit history and make a decision as to whether or not your application will be approved.

Thanks for asking.

- The “Ask Experian” team

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