By in Business

Financial Trickery

What Does "Pre-Qualified" Mean To You?

I often get letters through the post from various financial institutions wanting me to take out business loans or credit cards. They offer me amounts up to £500,000 ($629,000) at really low interest rates and include stories of how someone got one of their loans and now they are making millions a year.


As part of the "If ... Then" post I made some time ago, I have got rid of a lot of stuff (none of it mine) and sorted good stuff from rubbish that others stashed and dashed a long time ago. This is my decluttering to get the room the way I want it. It's not fully clear yet but I got a large table up into it and I am now sorting my post from the last few months. Most of it is just filing stuff because I know what is important when the post arrives and deal with that immediately (Hint: anything with Inland Revenue or Companies House). The junk is also got rid of immediately, so what I am doing at the moment is sorting statements that must be kept for 6 or 7 years and shredding that junk mail that has names and addresses on it! I need the filing cabinet for filing the statement and I decided I had done enough decluttering to warrant buying it. I had hoped it would be here today but no such luck. Hope it will be here tomorrow.

Any way, to get back to the point, some of the letters are being "American filed", that is binned or shredded. (I don't know whether this term is used in the USA LOL.) These are the ones from loan companies that want me to take out huge loans. Sorting this stuff is not mentally challenging and I find it hard not to read some parts of the letters. One phrase caught my eye, "You are pre-qualified for this offer". Now what does that mean? I wondered how I could be pre-qualified. Were they really prepared to let me have unlimited amounts of the green stuff because they knew what a great person I am?

Humpty Dumpty

If you have read Alice in Wonderland (Lewis Carroll) you will probably remember Humpty Dumpty, the large talking egg. One of his quotes that I have always loved is "When I use a word, it means just what I choose it to mean — neither more nor less." The word "pre-qualified" in the junk mail letter had a little asterisk beside it and that led to some tiny writing much further down the page. This defined "pre-qualified" as follows (direct quote):

"Pre-qualified" refers to our selecting your business for a potential funding solution. This does not automatically imply you will receive an approval limit. limits will be provided once you permit [company] to conduct a quotation search in order to assess your business."

So, what does pre-qualified" mean? In Humpty Dumpty speak it seems that it means "we picked your name out of a hat in order to send you junk mail to make us money. And if you bite, we will find a company to take you on (a quotation search) and they will pay us money for finding a new prospect. You might get turned down (does not automatically imply) and even if you get accepted, you might not get the low rate of interest because we only have to (by law) offer it to a few people, not necessarily you"!


They really must be living in Wonderland if they think I am going to take them up on this Humpty Dumpty offer!


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VinceSummers wrote on July 2, 2019, 6:51 PM

As soon as I read the word "pre-approved"... Well we have gotten mail like that by the ton. And as you astutely explain it means nothing. When I see the words, it's circular file cabinet time...

MegL wrote on July 3, 2019, 3:10 AM

Circular file cabinet! Waste paper bin? LOL

melody23 wrote on July 5, 2019, 12:53 PM

The day we got the keys to our current house and I opened the door for the first time there were three letters - a lovely one from the bank (who we get our mortgage from) welcoming me to my new home which was actually really sweet, a council tax bill and another from the bank telling me I could have a £10,000 home improvement top up to my mortgage - they wouldn't have actually given me it because I didn't have enough equity in my house to keep my loan to value above the limit required so I only assume I was 'pre-qualified' based only on the fact that I was a new mortgage customer. Now what I would have preferred the bank to do was either reduce the amount of deposit required on the mortgage in the first place, or offer me a loan for the legal fees since that's what almost bankrupted us at the time that would have been far more helpful.

Although many years ago my mum was so fed up getting 'pre-approved' notices from a credit card company that she should not have been in a position to get approved from that she signed the form and sent it back, figuring once they realised she wouldn't in fact be approved they would maybe stop writing to her - a week or so later a card arrived!

MegL wrote on July 5, 2019, 2:35 PM

I remember many years ago when credit cards actually arrived in the UK. When we got married, you had to take out a loan on every single item you wanted, using "hire purchase", which meant a visit to a shop and filling out lots of forms (or else pay cash). Then you had to visit the shop every month to get your payment ticked off a card. When credit cards came into the UK, the banks sent them out to every customer, without asking them or requiring a credit check or anything! When ours arrived, I cut them up and destroyed the letters. I think that was the start of the huge credit problem the UK has.

melody23 wrote on July 8, 2019, 12:07 PM

credit was too easy to get when I was getting old enough in the early 2000's as a student with a part time job I was easily able to get a large overdraft and a few credit cards, once I was finished my year in college as far as they knew I had no way to pay them so them giving me them was pretty stupid - I did eventually pay everything off but knackered myself financially in the process. I am a lot more sensible now but the amount of available credit I have is almost equal to my salary, plus I have a mortgage on top of that! Credit cards are great if used sensibly, but I speak from experience when I say its too easy to build up a big credit limit, then its far too easy to use that which makes your payments so high that you are only ever paying the minimum which takes around 20 years to pay off the card!! For splitting big purchases over a few months they are great if you are disciplined enough to use them that way though and you should always use a credit card for buying online or paying for holidays because it gives you extra protection, but the difficult part is to pay it off on time

MegL wrote on July 9, 2019, 6:50 AM

Totally agree!