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What’s the difference between being preapproved and prequalified for a credit card?

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When you’re considering applying for a credit card, it’s helpful to know beforehand whether you have a good chance of getting approved, especially if you aren’t sure your credit score is high enough. That’s because applying for a credit card typically means a “hard pull” on your credit, which can cause your score to take a temporary dip.

Consumers can get a better sense of their odds by getting “prequalified” or being “preapproved” by the credit card issuer. The terms are similar, and some issuers even use them interchangeably. But there’s an important distinction.

In general:

  • Prequalification means that the issuer has taken a look at your financial details and given you its best guess as to whether you’d be approved if you applied. It’s not a guarantee, but it’s a good sign.

  • Preapproval, on the other hand, is more official. If you’ve truly been preapproved for a credit card, you’re almost certain to get it if you apply.

To make things even more confusing, both can also be referred to as “prescreened” offers.

When you go through a prequalification or preapproval process with a card issuer and get a thumbs-up for a particular offer, read the disclosure you’re provided. It should make it clear where you stand — whether you’ve just jumped the first hurdle or are nearly at the finish line.

Preapproval has a different meaning with credit cards

With installment loans, such as mortgages and car loans, the difference between prequalification and preapproval is more clearly defined, and it’s not uncommon for consumers to go through both as they get closer to a decision. As you start looking for a house, for example, prequalification gives you an idea of how much you’ll be able to borrow. Getting preapproved allows you to make a firm offer to the seller when you find what you want.

Also see: Joining the military can affect your credit, learn how to protect it

With credit cards, on the other hand, you don’t typically need that kind of advance approval. So prequalification is much more common that true preapproval. In fact, receiving an unsolicited guarantee of approval from a credit card issuer can be a red flag. That’s because some issuers promise preapproval in the hopes of selling you on a card you don’t necessarily need or want.

Preapproved credit card offers may come from an institution where you’re already a customer, in an effort to get you to open another card. Or they may come from issuers that specialize in “instant-approval” cards, which tend to carry extremely high fees.

Review any preapproved credit card offer you receive skeptically before applying to make sure it’s the right choice for you.

If you’d prefer not to get prescreened offers in the mail, you can opt out by going to optoutprescreen.com, which is run by the consumer credit reporting bureaus. You can sign up to opt out of prescreened offers for five years or permanently.

Major issuers generally offer prequalification

Many major credit card issuers and some smaller ones offer prequalification on their websites. The issuer asks for personal information, including your name and address and some or all of your Social Security number. It uses that information to run a “soft” check of your credit, which is one that doesn’t affect your credit scores.

In some cases, you’ll be able to see not only the card you prequalify for, but also the exact terms of the offer — such as the credit limit and interest rate — before you apply. These kinds of prequalfications are more specific and detailed and may even amount to a preapproval, but you still have to formally apply for the card.

If you decide to apply for the card based on that information, the issuer will go ahead and run the hard credit check. It will likely ding your score, but you’ll have more assurance of approval.

Read: What is the FICO Resilience Index, and how will it affect your credit?

You can also make your own best guess about whether you’ll be approved for a card by considering your credit score. Some credit cards are available only to those with excellent credit, or good to excellent credit.

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I married the ‘life of the party’ who was a regular at Royal Ascot. But all he does is take his financial troubles out on me

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I don’t know where to start. So I will start at the beginning. I met a man at a friend’s wedding a few years ago. He was charming in that British-man-in-America sort of way (Hugh Grant has a lot to answer for), he told jokes (perhaps too many jokes, in retrospect) and made me laugh (at first). He was the life of the party, with a wide circle of friends and everyone seemed to love him.

He also had a very lavish, conspicuous lifestyle: a house upstate where he entertained his friends at weekends, he sailed in the summer, and he was regularly photographed at charity events on both sides of the Atlantic. He posted photos of himself on Facebook at Royal Ascot for several years (before the coronavirus pandemic). He seemed like the most popular guy in the world.


‘The first six months were good, the next three years? There are three topics: My husband, his business and his family.’

He was a generous man an d financially stable, or so I thought. Of course, his success and ease with which he seemed to navigate the world made him attractive to me, but I fell in love with him, and when he proposed, I said yes. The first six months were good, the next three years? Let’s just say there are three topics of conversation: My husband, his failing business and his terrible family. The pandemic hurt the already shaky family firm.

As his financial troubles worsened over the course of our marriage, he became short-tempered. I attributed that to the stress he was under. He actually shared this business with two brothers, so his expense account and “champagne lifestyle” was being funded by his family as much as actual profit. In fact, it soon became clear that he was neither the brain or the brawn of the operation.

Our life has descended into stress and instability. His flashes of anger appear with increasing frequency, as do his allegations that I am a gold-digger, which conveniently cast me as a villain deserving of no respect. For the record, I always work and pay my own way. (Six months ago, he pushed me and I fell backwards over the arm of a sofa. Fortunately, it broke my fall.)

I have no idea who this man is. His friends, as much as one could call them that, deserted him a couple so years ago when the expense account ran out. He ridicules me, holds the fact that I wanted a child over my head (I’m 38), and last year he did not hide his disgust at the birthday gift I got him (a photo album of our courtship, in addition to a dinner and silver cufflinks) in my face.

I’m exhausted. There is only one person in the world who matters, and it’s him. Some days he’s up and friendly, usually when we are on Zoom calls with family and (my) friends, but when that camera is off you better watch out. I’m living with a stranger. I have no clue what will happen next. His birthday is coming up in March, and I am dreading choosing a gift for him after last year.

What would you get him for this birthday? Any other suggestions about what I should do?

Trapped & Exhausted

Dear Trapped & Exhausted,

A ticket to London, England. One way.

But your situation is quite different from my hypothetical one. I wills say this: I’m not sure it’s possible to know who you married if he doesn’t know who he is himself. Hugh Grant has actually come into his own playing villains and rogues (Jeremy Thorpe in “A Very British Scandal” on Netflix
NFLX,
+2.19%
,
Phoenix Buchanan in “Paddington 2” and Jonathan Fraser in “The Undoing” on HBO). In each role, he was playing a man with many faces, but was not who others believed him to be in either role, and I’m not sure Thorpe, a real-life British politician, Fraser, a fictional murderer, and Buchanan, a cartoon villain of many disguises, knew who they were either.

I suspect the same is true for your husband. Is he an amusing socialite and risk-taking business mogul by day and a bumbling, ne’er-do-well, Black Sheep of his family by night? If he doesn’t know who he is and where his own values lie — and value lies — I can’t blame you for not knowing. I do not believe you are a “gold digger,” but I do believe that you bought into whatever it was he was selling to the world: a debonair, bicontinental bon vivant who had not a care in the world and who got by on chutzpah, smarts (let’s assume), likability and talent for navigating “high society.” That’s natural. We tend to believe who people say they are, unless we have reason to doubt them.

For every Jeffrey Epstein or Robert Maxwell, there are a thousand Phoenix Buchanans. Everything and nothing in life is about money. A child is not a bargaining chip. A marriage certificate or property deed is not a life sentence. A birthday present is not a time bomb. Presenting oneself as a success on social media is not real life. It is the 21st Century version of Buchanan’s act at the village fête. When domestic violence or emotional abuse rear their head, the fear persists. When will it happen again? Today? Tonight? Tomorrow? Any moment now? Close your eyes. Imagine your dream life. And choose that.

The door is waiting for you, if you choose to walk through it.

Are you experiencing domestic violence or coercive control? Call the National Domestic Violence Hotline. FreeFrom works to establish financial security for domestic-violence survivor and the National Coalition Against Domestic Violence supports efforts that demand a change of conditions that lead to domestic violence and coercive control.

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com

Also see: ‘We’ve seen an alarming spike in domestic violence reports:’ For some women, it’s not safe to leave the house OR stay home

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By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.



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My brother owes $10K to our late father’s estate. There’s no loan agreement and I’m executor. How should I approach repayment?

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Dear Quentin,

My father passed and I am the executor of his will.

We sold the house and Dad’s assets with my brother’s help. Probate is done. We are ready to distribute the remainder of my father’s estate, but my brother owes the estate $10,000.

He feels that if he had paid this money back before Dad passed, he would still get half back, and therefore owes $5,000. (Dad also told me that he owed the money before he passed.)

My father’s will says his estate should be split 50/50. I feel my brother owes $10,000 to the estate. I do not want to rock the boat, and will do the right thing in order to keep peace.

What is the proper way to split $200,000 in cash when he owes the estate $10,000? For the record, my brother will abide by whatever I decide. Thank you in advance for your help.

Trying to Do the Right & Proper Thing

Dear Right & Proper,

You are right to not look for trouble where there is none.

Given that there is no notarized loan agreement between your brother and your late father and there is money to be distributed, it would seem simpler and faster to have him sign a note now saying he owes the estate $10,000 and deduct the $5,000 from his eventual inheritance. Done and done. He could, after all, say that the loan was only due to be repaid when your father was alive or, indeed, say the loan was a gift. (The subject of countless episodes of “Judge Judy.”)

Your story is a cautionary tale of what could go wrong. “A hug or a handshake is not sufficient to bind someone to loan repayment. Loans and repayment obligations should be spelled out in writing and include repayment terms upon the testator’s death,” according to the Absolute Trust Counsel, a California law firm. “It is the responsibility of the executor to collect the balance due. An estate cannot be settled until all loans are collected and all debts settled or paid.”

“When an estate is insolvent, the collection of outstanding loans becomes especially important. Creditors want to be paid and will pursue all available resources to accomplish that,” the firm adds. “Many times, unpaid loans create dissension among heirs. In some cases, heirs who owe money still expect to receive an equal share of an estate.”

There is a healthy cash sum from which to deduct your brother’s loan: $105,000 for you and $95,000 for him. It could get sticky otherwise.

Thankfully, your brother also wants to do what’s right and proper.

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

The Moneyist: ‘Warren Buffett and Harry Potter couldn’t get those two retired early’: Our spendthrift neighbors said our adviser was ‘lousy.’ So how come WE retired early?

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These money and investing tips can help you sail the stock market’s choppy seas

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Don’t miss these top money and investing features:

These money and investing stories, popular with MarketWatch readers over the past week, give you tips about how to navigate the financial markets after February’s bumpy second half and signs pointing to March blowing in with more unpredictable winds.



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