You can get pre-qualified or pre-approved in any instance where you need to borrow money from a lender or open a new line of credit. The most popular reason to borrow money is for a home or car loan; for credit, the most common reason is to open a new credit card.
Pre-qualified vs. pre-approved credit cards
A pre-approval for a credit card gives you a better chance of becoming a cardholder. A card company consults a credit bureau to evaluate your creditworthiness before making you a pre-qualified or pre-approved offer.
If you’re interested in applying for that new card, you can respond to the offer to become a cardholder. Using pre-qualified or pre-approved offers is also an opportunity to compare options before officially applying.
Pre-qualified vs. pre-approved mortgage
When it comes to home loans or mortgages, pre-qualifying isn’t as involved, as it simply gives you an idea of whether you could qualify for a loan and, if so, for how much and at what interest rate.
However, getting pre-approved requires more legwork and shows the lender is committed to moving forward with the loan.
Getting pre-qualified for a mortgage is easier than being pre-approved, which also means a pre-qualification is valued less by sellers regarding your ability to get a mortgage loan. When buying a home, being pre-approved has more weight than being pre-qualified.
Pre-qualified vs. pre-approved car loans
When you are pre-qualified for a car, you get an estimated amount of money you might qualify for and an interest rate. At this point, the lender has looked at your finances to make this decision. If you are pre-approved, you are authorized for a set amount of money to purchase your car.
