Isn't it annoying to receive all that junk mail from credit companies trying to convince you to apply for their plastics? Pre-approved offers are based on the data in your credit report that indicates you meet the specified criteria. According to the Fair Credit Reporting Act of 1970 (amended in 1996), the three major credit bureaus have the right to sell your information to companies that want to offer you their credit cards. Fortunately, the amendment also requires the credit bureaus to provide a way for consumers to remove their names from pre-approval lists.

Credit card companies are constantly looking for new profitable customers to replace those who leave and to keep their profits permanent. The combined costs of advertising and application processing for establishing new accounts can be rather expensive. They can reach $200 per account. The rates for direct mail are lower. So no wonder that many unknown or new creditors prefer to find new clients by sending their offers by mail.

Banks don't offer their credit cards to everyone. They try to get consumers who can meet their requirements and qualify for a credit card. A bank sends a set of searching criteria to one of the credit bureaus (Experian, Equifax or TransUnion), and requests a list of consumers who can be eligible for their credit offers. The practice of generating and selling marketing lists for "pre-approved" offers is allowed by law.

"Pre-approved" credit deals, however, can be misleading. They don't say you are approved, there is a difference between "pre-approved" and "approved". If you respond, the creditor will access your report before actually decide whether to approve your application or not. This is explained in the fine print on the pre-approved offer.

Read carefully between the lines if you want to avoid credit traps. Keep in mind that pre-approved offers are designed to catch your attention. When an interest rate is promised to be "as low as" a certain amount, it is not a guarantee of that rate. And "up to" a certain credit limit doesn't always mean that it will be equal to that amount.

You have the right to know who has requested your credit report over the last 6 months. Inquiries related to pre-approved offers are designated as "promotional". They are not available to other credit companies. The prescreening cannot lower your FICO score, but it can become a big detriment to your mailbox.

If you are sick and tired of receiving pre-approved offers, you can remove your name from marketing list compiled by a credit bureau. Call the toll-free number which all credit reporting bureaus are required to have for this purpose. Another way to opt-out is to send a letter indicating your intention. Don't forget to include your phone number, full name, mailing address, and SSN. If you have moved in the past 6 months, you should include your previous address as well.

Keep in mind that if you have joint credit accounts with your spouse or partner, you may continue to receive some pre-approved offers until both of you exercise your opt-out right and remove your names from the marketing lists.