Pre-approval and pre-qualification are two completely different things, and knowing the difference could save you a lot of heartache and stress. Before you open your next line of credit, this is what you need to know about what pre-approval means.  Also: The 4 best instant-approval business credit cards After you apply, the company will make a hard pull on your credit in order to review your credit history in greater detail. Unlike a pre-approval, this hard pull will affect your credit score. But, not all hard credit pulls are the same, as it depends on the quality of your FICO score. But, on average, a hard pull will drop your FICO score by less than five points. According to FICO, if your credit history is strong – with no other credit issues – you’ll see less of a drop in your score than someone who has issues with their credit. Fortunately, the drop lasts a few month, provided that other facets of your credit history are in good standing.

No fees assessedDoes not affect your credit scoreSaves the time of an applicationAllows you to check your credit qualifications Can lead to more competitive offersMay expedite your application

Perhaps most importantly, pre-approval helps you understand your credit score and what you may qualify for, both now and in the future.  Also: How to get pre-approved for a Chase credit card 

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No matter your situation, we recommend that you reach out to your creditor or lender to get a few more details regarding the pre-approval process and credit requirements.    After that, it is up to the lender to approve or deny your application. Most approvals are based upon specific credit score requirements, as well as your debt-to-income ratio. A debt-to-income ratio of 36% or lower is recommended for the best shot at approval. Many lenders also offer tools to help you determine the best financial path for your situation.  For example, Capital One offers a simple pre-approval tool that allows you to see your options before you go through the whole application process.  Before you complete an application, remember that an application will mean a hard pull on your credit, impacting your credit score, while pre-approval simply uses a soft pull. It is enough to make you think twice when you receive that offer in the mail.