What Does Instant Approval Credit Really Mean?

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Your credit score is not where you'd like it to be but you need access to credit fast? Take a look at what instant credit approval means

Nowadays, virtually every credit card offers an approve or deny decision within minutes of applying online. So the term “instant approval credit card” is not a good way to distinguish one type of card against another.

The only thing that matters is the condition of your credit history as there are options for those with bad, fair and excellent credit.

FICO Score Ranges:

  • 800 or above: Exceptional
  • 740 – 799: Very Good
  • 670 – 739: Good
  • 580 – 669: Fair
  • 579 and below: Poor

A Behind the Scenes Look at the Approval Process

What makes them “instant” is that you typically apply online (which you can do with most cards), the carrier does a preliminary check on your credit score and then reaches a decision within a few minutes. You'll have to wait 7 to 10 days to receive your card, however, some companies offer expedited delivery service for a fee if you need the card quickly. You can, of course, apply by phone or mail, however, expect a longer wait time before receiving a decision if done by mail.

It's a good idea to know your credit score before applying to ensure quick approval without any surprises. One main reason why there might be a delay when applying online is if the card issuer required more information from your credit report. This would typically happen if your score wasn't as high as desired as each card issuer has their own requirements as to what's acceptable for a specific card. So if you find yourself barely making the fair credit score range, it might be best to apply for cards meant for poor credit to reduce the risk of being denied.

Secured Vs. Unsecured

When applying for instant approval credit cards for bad credit (those with credit scores below the 580 range), card issuers could either provide a secured or unsecured credit card appropriate for those in this category.

Here's a quick overview of both versions:

  • Secured Credit Card: Obtaining this card gives you the ability to make a deposit, say $200, which would be used to pay off any purchases in case you got behind on payments. Otherwise, as long as you continued making regular payments, the security deposit would remain in place. This is beneficial to those who'd like to establish or repair their credit while minimizing risk to the provider. Your credit limit would either be half or the entire balance of the security deposit or more as a way to incentivize potential customers.
  • Unsecured Credit Card: Another option would be an unsecured card. With these no deposit would be necessary, however, because you'd be a risk to the carrier by having poor or no credit, you'd have higher interest rates and perhaps a fee as a condition to use the card.

Pros and Cons of Instant Approval Cards for Poor Credit

As with all things, it's best to weigh the pros and cons of instant approval cards for bad credit on a case by case basis. For example, if you need to make a large purchase that you do not have money readily available, then an unsecured card might be the way to go. Just be sure to pay the bill in full when due to avoid the interest rates.

Additionally, if using the card to build your score, be sure to check your credit report at least once a year to confirm the provider is actually reporting your activity to the credit bureaus. Not all companies that offer these cards report payment activity to national credit bureaus. This means that you may not be building credit with an instant approval card. One reason behind this includes cost-saving measures – especially with local or regional banks who issue credit cards to those who have poor credit.

Final Thoughts on Instant Approval Credit

There are pre-qualification tools at major card issuer websites that ask basic information like full name, address and last 4 digits of your SSN. After completing these forms, they'll usually offer cards they believe you can be approved for once you apply. It's important to understand that approval is not guaranteed, but only a possibility. Every time you apply, a hard inquiry is recorded on your report which can remain up to 2 years and potentially lower your score. This is why knowing your score and applying for cards a category below where you stand is a good practice.

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