what does it mean to be pre-qualified

[ktl55]

I've seen this mentioned many times but what exactly does it mean? How does a soft pull qualify you if all they see is your name and address; or do they see more? I was under the impression that a soft pull was just to verify identity and address. How is that a pre-qualification?

[Anonymous]

KTL, I believe what happens with most pre-qualifying creditors is that the creditor "buys" (from a bureau) a list of consumers that "fit" a pre-determined credit profile, and then the creditor solicits those consumers. They'll generally do a hard pull after you finish the full application, and if they info you supply matches the "pre-screened" info from the bureau, then you're likely to be formally approved. In other words, a creditor will buy a list of consumers' names where, for example, credit scores are between 500-600 with recently established credit... and they'll market their product to that crowd. It's the same for creditors looking for "spotless" credit histories to market high-line card to. They will stop marketing to you, however, if you go through the "opt-out" procedures. Good luck to you.

[Tuscani]

To pre-qualify means only income and monthly obligations (debts) are considered without verification of that information or the review of their credit history. A seller will be less inclined to accept since there is no guarantee that this offer can secure adequate funding.

A pre-approved buyer has completed a application, documented their financial situation and reviewed their credit report. They have a commitment letter from their lender stating that they are pre-approved for a mortgage up to a certain amount based on the property appraising at the asking price or higher.

Preapproved buyers are viewed as cash buyers because their loan is guaranteed.

[Anonymous]

Generally pre-approval means you are guaranteed the offered product. Pre-qualification does not guarantee anything. Odds are you will still get a hard inquiry if you apply--whether pre-approved or pre-qualed.

Soft pulls still show all info on your CRs.