House shoppers get a lot of comfort from having a pre-approved mortgage. Knowing how much a bank will lend you removes one big worry from the process of finding the right home. In this context, “pre-approved” means that the bank took your relevant personal details and determined how much they would lend you. However, when it comes to credit card offers from the very same banks, “pre-approved” seems to mean something completely different.
According to this strongly-worded explanation, when it comes to credit card offers, “pre-approved” means “not yet approved” as opposed to “approved in advance”.
When yet another pre-approved credit card offer from RBC arrived in the mail, I decided to check just how pre-approved I really was. A footnote from the heading on RBC’s offer pointed me to some fine print on the back that explained what they mean by “pre-approved”:
“This pre-approved offer is based on the credit and financially related information the Royal Bank of Canada has about you.”
This certainly implies that I was approved in advance. A quick look at the application tends to support this interpretation; the only information RBC asked me to provide is
– Telephone numbers
– Birth date
– Employment Income
– Mortgage or rent payment
The application explains that my personal income must be more than $60,000 or my family income must be more than $100,000. So, I'm obviously not fully pre-approved. But the lack of any further questions implies at least a partial level of pre-approval.
To test this, I went to the RBC web site to check out the application that just anyone would have to fill in. The only additional questions on this application beyond the ones above were
– Years at current address
– Years with current employer
They don’t seem to care about assets and liabilities beyond house and mortgage. So, beyond what RBC was able to figure out from my address, it seems that my pre-approved status has little meaning. It would be nice to force banks to use the term “pre-approved” consistently between mortgages and credit cards, but this is likely too much to ask when it comes to marketing.