Pre-Approval

Pre-approval is a term used in lending with two meanings. The first is when a financial institution has determined that a person is credit-worthy for a specific financial product. The institution guarantees approval should the person choose to accept to apply.

This term should not be confused with pre-qualification which is more common. By contrast, pre-qualification is when a financial institution has obtained data about a prospective customer but not verified it. The institution retains the right to deny an application if the applicant is merely pre-qualified.

The second use for the term pre-approval is when a mortgage company issues a letter verifying a buyer’s credit rating and income for the benefit of the seller. The document issued by the financial institution is known as a pre-approval letter.

Click for the full glossary of credit card terms.

Similar Articles:

Credit Cards

Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!