Impact of Pre-Approval on Your Credit Score
When considering applying for a Wells Fargo credit card, many wonder how the pre-approval process might affect their credit score.
Understanding this impact is crucial, as your credit score can play a big role in the approval of your application and the overall financial health you maintain.
Here’s what you need to know about how being pre-approved for a credit card affects your credit score.
Soft Inquiry Doesn’t Lower Your Score
Since pre-approval is based on a soft inquiry, you can check your eligibility without worrying about negatively impacting your credit score. This allows you to explore your options and understand where you stand before making a decision to fully apply.
Hard Inquiry Can Lower Your Score
If you proceed with the application after pre-approval, Wells Fargo will perform a hard inquiry. A hard inquiry will likely result in a temporary drop in your credit score of around 5-10 points, depending on your overall credit history.
While this drop is typically short-lived, it’s essential to be mindful of the fact that it could affect your credit score in the short term.
Effect of Multiple Applications
If you apply for multiple credit cards after getting pre-approved, each application will lead to a separate hard inquiry, which can result in a greater reduction in your score. Multiple hard inquiries in a short period may suggest to lenders that you’re a higher-risk borrower, which can further affect your ability to be approved for future credit.
Maintaining Good Credit Habits Helps Offset the Impact
The key to minimizing the impact of a hard inquiry on your credit score is to maintain healthy credit habits. Keeping your credit utilization low, making timely payments, and managing debt effectively will help your credit score recover quickly from any temporary dip caused by a hard inquiry.
Pre-Approval Doesn’t Guarantee Approval
It’s important to note that being pre-approved doesn’t guarantee final approval for the credit card. After the hard inquiry, Wells Fargo will still evaluate your application based on various factors, including your income and overall creditworthiness. If you don’t get approved, your score will not be impacted any further.
Monitoring Your Credit Score is Key
Regardless of the pre-approval process, keeping track of your credit score is always a good idea. Monitoring your credit regularly can help you stay on top of any changes and ensure that you’re in the best possible position when applying for a credit card or other financial products.
By understanding how pre-approval affects your credit score and taking steps to manage your credit responsibly, you can navigate the process without causing unnecessary damage to your financial health.