Prescreen

Prescreen is the process by which a lender proactively evaluates a consumer's credit history in order to decide whether or not to offer them credit. The process of prescreening consumers happens without the consumers' knowledge and without any derogatory effects on their credit file. The use of credit data for prescreen is strictly regulated by the Fair Credit Reporting Act (FCRA).

History

The concept of prescreen was originally conceived as a new, more efficient method of account acquisition for financial institutions. Traditionally, financial services were provided by small community banks. These banks offered a specific set of credit products and services that met the needs of their community. When a potential customer would walk into their branch and apply for a credit product (like a credit card for example), the bank would evaluate the consumer's credit history and decide whether or not to approve the application.
However, as the financial industry consolidated in the latter half of the twentieth century, national financial institutions emerged, offering a comprehensive spectrum of credit products and services. This led to the creation of a national financial services marketplace in which new segments of profitable consumers across the country were up for grabs. Prescreen was developed to help banks efficiently tap this new, national pool of potential customers.