BILLIONS of prescreened or preapproved credit card invitations are sent out every year by credit card companies. So what exactly is a prescreened or preapproved credit card offer and how does it work?

Prescreened offers -- also known as 'preapproved' or 'prequalified' offers -- are based on the information in your credit report that indicate you meet a certain criteria set by the credit card issuer.When soliciting new credit card accounts, many companies use prescreening to identify potential customers for the credit cards they offer. Prescreened offers are generated in one of two ways:

• A a creditor or insurer establishes criteria, like a minimum credit score, and asks a consumer reporting company for a list of people in the company’s database who meet the criteria; or
• A a creditor or insurer provides a list of potential customers to a consumer reporting company and asks the company to identify people on the list who meet certain criteria.

Offers that result from this screening process are supposed to be 'firm' offers. A firm offer of credit is defined as any offer of credit to a consumer that will be honored if the consumer is determined, based on the consumer's credit report, to meet the specific criteria used to select the consumer for the offer, subject to certain confirmation requirements. However, this does not mean your approval is guaranteed. Any prescreened or preapproved offer should explain this as well as any other additional conditions such as the need to provide collateral. The prescreening process is done with a soft pull of your credit report and it will not have a negative effect on your credit report or credit score. There will be 'inquiries' on your credit report showing which companies obtained your information for prescreening, but those inquiries will not have a negative effect on your credit report or credit score.

Much like the 'Do Not Call' registry, there is a way you can 'Opt Out' and reduce the number of unsolicited credit card offer that you get. If you decide that you don't want to receive prescreened offers of credit you basically have 2 options. You can opt out of receiving them for a period of five years or opt out of receiving them permanently. To do this you will either need to call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit the website http://www.optoutprescreen.com for opt out details. The telephone number and opt out website are operated by the major consumer reporting companies. When you call or visit the website, you'll be asked to provide certain personal information, including your Name, Date of Birth, Social Security Number and Telephone Number. All of the information you provide is confidential and will be used only to process your request to opt out.

If you have joint credit relationships, such as a mortgage or a car loan with a spouse, partner, or other adult, you may continue to receive some prescreened solicitations until both of you have exercised your opt-out rights.

If you are considering opting out, you should know that not all prescreening is bad, some prescreened offers can provide many benefits, especially if you are in the market for a credit card. Prescreened offers can help you learn about what is available, compare costs or fees, and find the best product for your needs. Because you are pre-selected to receive the offer, you can be turned down but only under limited circumstances. The terms of prescreened offers also may be more favorable than those that are available to the general public. In fact, some credit card may be available only through prescreened offers. Removing your name from prescreened lists has no effect on your ability to apply for or obtain credit. Requests to opt out are processed within five days, but it may take up to 60 days before you stop receiving prescreened offers. Also if you opt out and then change my mind, you can use the same toll-free telephone number or website to opt back in.

It is important to remember that calling the opt-out telephone number or visiting the opt-out website will stop the prescreened solicitations that are based on lists from the major consumer reporting companies. You may continue to get solicitations for credit based on lists from other sources. For example, opting out won't end solicitations from local merchants, religious and charitable associations, professional and alumni associations, and companies with which you already conduct business. To stop mail from groups like these -- as well as mail addressed to 'occupant' or 'resident' -- you must contact each source directly.

Have you received a preapproved or prescreened credit card offer and would like more information on it - Click Here