Pre-Qualified vs. Pre-Approved: What's the Difference?

17 AUGUST 2023

Some people use the terms interchangeably, but there are important differences that every borrower should understand. Pre-qualifying is just the first step.Smiling woman working on her laptop at a tableWhat does it mean when you receive an offer from a lender and it says "pre-qualified" or "pre-approved"? It often signifies that at least part of the basic eligibility requirements needed for that offer has been met by your credit score and other financial requirements. Lenders can sometimes use the terms differently and occasionally interchangeably, so understanding the differences between the two phrases can be challenging. This article will unpack the things that make them different.

The critical aspect in both these phrases is "pre." When a lender offers someone pre-qualified or pre-approved, it usually signifies that they have met the first requirements necessary to obtain a credit facility. However, they must still apply and they must still be approved. Regard these offers as invitations to begin the actual application process. These offers serve as a reassurance to applicants earlier in the application process, they are meant to encourage applicants should they be doubtful of the possible outcome.


Pre-qualification denotes that the creditor has performed at least fundamental research into your creditworthiness to ascertain whether you are likely to be approved for a loan or credit card. This procedure is started by consumers when they fill out a prequalification application for a loan or credit card. Depending on the circumstance, different requirements may apply for prequalification.

Sharing fundamental details regarding your financial condition, such as your annual income, monthly housing payment, and savings, may be necessary. Being prequalified does not ensure approval. But it's generally a smart move if you can apply for prequalification with a soft inquiry. You can proceed and avoid the hard inquiry if you are rejected at this point.


Getting preapproved may be a better predictor of being approved for a loan or credit card, depending on the process. If you are preapproved for a credit card online, for example, preapproval and prequalified may both refer to the same thing. Additionally, you might have received pre-approval offers for loans or credit cards via mail, phone, or email. These prescreened offers often mean that you received a formal credit offer as a result of your inclusion on a list of clients who meet a creditor's requirements that is kept by a credit reporting agency. Whether you applied or got an offer saying you were pre-approved, there is still no certainty that you will be accepted.

Do Pre Qualifications and Pre Approvals Affect Your Credit Score?

Soft inquiries are frequently used in simple credit checks, such as those that result in pre-qualified or pre-approved credit offers, and have no effect on your credit score. When you apply in response to an offer, a hard inquiry is made that will impact your score. Facilities such as ClearScore offer a full credit profile, including enquiries made and active credit attached to your profile.

Your eligibility for the offer will be determined by the results of the credit check. The issuer must provide you with the same terms as those in the initial pre-qualified or pre-approved offer if you are authorised. Your eligibility can vary if your credit information changes between the time you go through the pre-selection process and the time you apply for the credit facility. This might occur, for instance, if there are any significant changes to your employment, income, or debt.

In summary, it’s a good thing to know that one is pre-qualified or pre-approved. This information can only serve you well as a borrower, especially where big purchases such as a house or a car are concerned.