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Facts

  1. My cousin in high school has ≤ $500 in her HSBC Canada accounts, and has never had any income or job.

  2. She has had only 1 Secured Credit Card with a $300 limit. She spends ≤ $90/month, and always pays it fully, punctually.

  3. Since receiving the offer beneath, she has done nothing that requires a hard credit check. So her credit history ought be the same.

  4. We know that notwithstanding her pre-approval, she must still apply froamlly and have her credit "hard-checked" (and appear on her credit report).

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Questions

  1. See the title. We worry that she'll be rejected, this pre-approval notwithstanding. What if this pre-approval is "bogus", and a marketing ploy to coax people to apply?

  2. Does HSBC's "pre-approval" imply an increase in her credit score (which she hasn't checked as checking isn't free)? If yes, then she's contemplating applying for another bank's credit card.

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  • You should probably add at least the text from the first footnote (1) as that may have important information on what they mean by "pre-approval". You might also want to carefully read the other footnotes: depending on exactly what they say, someone of a cynical disposition may think that the waiving of the $35 fee is just one of the options available ("$35 Cash Back rebate") and that you may not be able to get both that and the 5,000 points at the same time.
    – TripeHound
    Aug 28, 2018 at 8:53

2 Answers 2

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It means they'd love to give her $5000 of credit that she's probably not going to pay off immediately. I wouldn't count on her being rejected.

Credit card companies love giving college-age/near college-age kids a credit card because they're likely to run up a balance and make minimum payments for years to come.

Several credit card companies set up on college campuses and hand out free food for signing up. All of my friends who signed up was approved. They were 17-18-year-old college kids with no job and paying for everything with student loans. The cards are horrible, super high APR, and a fee after the first year.

She's already done the right thing in getting a secured card to limit how much financial trouble she can get into. Let this be the first lesson on trashing anything with the words "Pre-Approved" on it.

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These credit card pre-approvals are mostly meaningless. Receiving one basically means that they deemed you worth advertising to. That's an incredibly low bar, and means almost nothing when it comes to actually being approved.

Very commonly people don't get approved for the advertised offer, but instead for a lower limit and higher interest rate.

That said, your cousin's history with the secured card makes it sound likely they'd be approved for a low limit card, but this card doesn't seem like a good option. $35 fee in the 2nd year on such little spending is not justifiable and with so little credit history it's not ideal to be closing accounts after a year. Better to find a no fee reward card if looking to build credit and benefit from rewards a little.

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  • It looks like the $35 annual fee is optional — you can not enrol in the “awards program” and not pay it.
    – Mike Scott
    Aug 24, 2020 at 6:50

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