Does Getting New Credit Cards Hurt Your Credit Score?

One of the first questions that people tend to have before jumping on new credit cards is whether or not their credit score is going to be hurt if they apply for multiple credit cards.

The answer to this question can hinge on a number of factors like prior established credit history, payment habits, and a few other things. However, generally speaking, getting approved for new credits will not hurt your credit score and will usually even improve it!

This article will walk you through why getting new cards should improve your credit score.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

Utilization and Payment history (65%)

The great news for people who want to apply for a lot of credit cards is that the primary factors that affect your credit score are your: 1) payment history and 2) utilization.

In fact, these factors are estimated to account for 65% of your credit score! For responsible credit card consumers, opening up new credit cards will only allow these factors to continue to benefit your credit score over time and here’s how.

Payment History (35%)

Payment history is the most important factor in determining your credit score.

If you have paid all of your car loans, student loans, previous credit cards, etc. on time, then you’re in luck because your payment history will only continue to benefit your score over time as you add more cards to your credit portfolio.

If you have some late or missed payments then it’s going to be more of a headache for you. You’ll generally have to wait seven years for late payments to be removed, though you can always try your luck with goodwill letters and contacting your creditors.

The good news is that if you can get a few approvals then your monthly payments on these new cards can help “dilute” your negative payment history and bring your payment history closer to 100% satisfactory a lot quicker.

Since payment history is so important to your score you need to realize the importance in remembering to always make timely monthly payments.

As mentioned, maintaining responsible payment habits will increase your score over time but there’s always the risk that with more payments to remember you might be more susceptible to missing a payment (just something to think about).

Still, the important take-a-way is that the most important factor for your credit score, payment history, will be positively affected as you open up new credit cards and responsibly make your payments on time.

Utilization (30%)

The second most important factor for your credit score is utilization (how you pay off your credit card bills). This is also known as your “credit-to-debt” ratio. You can figure out your utilization by dividing your outstanding balance by your overall credit limit. For example, if you have a credit limit of $30,000 but have $10,000 worth of debt, then you divide 10,000 by 30,000 and you get a utilization score of 33%.

There are two things looked at with this score: your overall utilization and the specific utilization on each card.

Overall utilization

This considers every line of revolving credit that’s currently open. This percentage needs to be as low as possible. Generally, under 10% is thought to be excellent but I keep mine at about 4% to keep my score as high as possible and to avoid paying interest on my accounts.

Opening up new credit cards can create a snowball effect that benefits your utilization and ultimately your credit score. Here’s how this snowball effect works.

First, it becomes significantly easier to keep your utilization low once you get approved for additional cards. Let’s say you had one credit limit of $5,000 and $1,000 of outstanding debt. Well, your utilization would be 20%. If you could only get approved for one card with an additional $5,000 credit limit you could cut your utilization down to 10%, increasing it from “good” to “excellent.”

This decrease in your utilization then leads to a bump in your credit score but the effect doesn’t stop there.

When it’s time for you to apply for your next credit cards the banks will see: 1) an improved credit score and 2) that other banks found you to be a low credit risk since they offered you additional credit.

This will lead to additional approvals with often even higher credit limits, which of course leads to more easily maintained lower utilization. So now your $1,000 of debt may only account for 5% of your utilization or potentially even less.

The cycle then repeats itself and goes and on, continuously lowering your utlliization, building up your payment history, and ultimately increasing your credit score.

Specific Utilization

Your overall utilization is  more important than the specific utilization of each card but having a high utilization on a single card can still hurt your credit score, especially if you don’t have many credit accounts. Your specific utilization for each card needs to be 30% or lower for optimal results, although there’s usually more wiggle room for specific utilization than overall utilization.

Where having a high utilization on a single card can really hurt is with specific banks. Some banks may not want to extend you additional credit if you have a high utilization on a single card issued by them so it’s always a good idea to avoid having a maxed out (or close to maxed-out) card even if you don’t think it’s significantly damaging your score.

Getting new credit cards can help you indirectly with your specific utilization because some banks like Chase will allow you to transfer credit lines from other cards. So if you were near 50% on a Chase Freedom card and got approved for a Sapphire Preferred, you could also transfer some credit from the Sapphire line to the Freedom line to decrease the utilization.

The Takeaway

The takeaway on this is that at least 65% of what determines your credit score should be positively affected by getting new credit cards. This means that on average the benefits of getting new cards will outweigh the negative effects and your credit score should rise in the long-run.

We can’t discuss the good without the bad. Even though the benefits to opening up new credit cards outweighs the negative factors, here’s a look at some of the factors that can hurt your score when applying for new credit cards.

Two factors that will negatively affect your score

The things that are going to hurt you are: 1) credit history/average age of accounts and 2) new accounts.

Credit history/Average age of accounts (15%)

Your credit history aka average age of accounts (“AAoA”) is the factor most detrimental to your score when getting new credit cards. Applying and getting approved for new credit cards will (almost) always bring down your average age of accounts and thus work to counteract the benefits to your credit score.

How much damage will be done depends on a lot on what your current credit portfolio looks like. If you have some established accounts from years ago, then a new credit card will only have a minimal impact. If you have a thin profile and do an “app-o-rama” where you apply for 3-5 cards at once, you’re AAoA will take a serious hit and lower your credit score, at least temporally.

Thus, while a single new credit card shouldn’t hurt you too much (if at all), it all depends on your personal credit history in terms of how much damage will be done with multiple cards.

Related: Does Closing Your Credit Card Hurt Your Credit Score?

What can you do to limit the damage?

If you have a thin credit report, there’s not too much you can do to protect your average age of accounts from being hurt once you start applying for tons of new credit cards. However, there are a few things that can help.

Adding yourself as an authorized user to older credit cards. The bad news is that this will often show up as a new account on your credit report. Still, adding yourself to one or two old cards can provide you with a decent boost.

The second way is to utilize small business credit cards. Most business credit cards do not show up as new accounts on your personal credit report and so they won’t lower your average age of accounts.

New Credit (10%)

The second way applying for new credit cards can negatively affect your score is buy impacting your new credit category. New credit accounts for 10% of your credit score. The main factors in this are hard-pulls and the opening of new accounts.

Hard-pulls

Contrary to what many believe, hard pulls aren’t a huge knock on your credit. Usually, a new hard-pull will bump your score down 2-5 points but only temporarily. The negative effect of a hard-pull tends to diminish within about 60 to 90 days so they don’t really present long-term trouble for your score.

New Accounts

New accounts can hurt your score a little more, however.

One way credit cards hurt your score is if you pursue many new lines of credit in rapid succession. This makes you look desperate for credit to banks and therefore more of a credit risk. Getting one new card shouldn’t look bad but getting 5 cards in one week will cause some damage to your score. Thus, if you plan on pursuing multiple cards it makes sense to be as patient as possible when planning out your applications.

Note: if applying for a mortgage loan or car loan you need to be extra sensitive to the effect of new accounts on your credit.

An additional way that new accounts damage your score is that they lower your average age of accounts. Again, this is not a major concern for people only considering applying for a small amount of cards, especially if they have an established credit history.

One thing to keep in mind if you’re planning on applying for several cards is that it is not uncommon for your credit score to dramatically rise and fall during the process. As hard pulls, new accounts, new utilization percentages, and payment history change, they are all calculated in unique ways and given different weight at different times.

Your credit score could dip 30 points in January and then rise 40 points in February, only to fall 8 points in March and rise 2 points in April. The important thing to remember is that if you responsibly manage your payment history and utilization (worth 65%) your score should always rise in the long run.

Credit Mix: A neutral factor? 

Credit Mix (10%)

Credit mix is considered to be the least important factor for your credit score, so I’m just including it for the sake of completion.

Credit mix considers both the number of credit accounts and the variety of them. For most people new to credit cards but currently paying on an auto loan, student loans, mortgage, etc., their score should benefit with new credit card accounts.

However, in the end, this factor probably isn’t going to affect your credit score too much either way, so I wouldn’t make it a deciding factor when choosing whether or not to apply for a credit card.

Conclusion

At least 65% of what affects your credit score should be benefited with new credit cards. 10% may or may not be benefited, and only a remaining 25% may be negatively affected by pursuing new cards.

Therefore, on average, there’s more benefit than harm done to your credit score when you apply for new cards and so long as you’re responsible, you shouldn’t worry about damage to your credit score when applying for new credit cards. 

Why Did My Credit Score Go Down After Opening Up A Credit Card?

A lot of people are disappointed to find out that their credit score has gone down after opening up a new credit card. In some cases the credit score goes down twice, once directly after an application and then again sometime around a month or two later. This causes a lot of worry but it’s completely normal when this happens and it’s only temporary. Here’s what’s likely going on when this happens.

How is a credit score determined?

To understand what’s happening, you first need to have a good grasp on how credit scores are determined. There are a number of different types of credit scores but the one most commonly used is the FICO model. Your FICO credit score is determined by the following categories:

In this instance, the biggest factor that will be negatively affected is the new credit category that makes up 10% of your score. New credit looks two major things affected here: recent inquiries and new accounts opened.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

Inquiries

When you apply for a line of credit, the lending institution will typically do a hard pull on your credit report. (I say “typically” because some banks such as American Express do not always conduct a hard pull on your credit report.)

For many, this hard pull results in about a 3 to 5 point drop in your score. But that is just the average drop you would typically expect.

For lower credit scores or for people with thin credit profiles this drop could be much higher (even over ten points). This is especially true if you have back to back inquiries within a matter of days or weeks.

For those with more established credit reports (or people with perfect credit scores) the drop could be negligible. I’ve even heard reports of people not seeing a drop at all in their credit score, though that seems to be pretty uncommon.

Most of the time, the drop in your credit score from a hard pull will be instant. In fact, I have even seen a hard inquiry notification show up before a credit card application is finished processing.

If you check your credit score right before and after you submit an online application for a credit card you will likely see that your score has already dropped. The good news is that the negative effect of these inquiries will diminish in roughly 60 to 90 days.

At that point your score should start to recover or already be completely recovered from the hard pulls. After 12 months, the hard pulls will no longer affect your FICO score and after 2 years the inquiries will disappear entirely from your credit report.

A lot of people are aware of the first drop caused by hard inquiries, but I still get emails from people who are concerned when their score inexplicably drops a second time, usually around a month later. There is often a simple explanation for this.

Related: How Do Credit Inquiries (Hard Pulls) Affect Your Credit Score?

New accounts opened

In addition to hard pulls, new accounts will also often drop your score but it may not be instantly. this is because some banks take a few weeks (or even months) to report a new account to your credit report. For example, many times it takes approximately 45 to 60 days for an American Express account to appear on your credit report.

When that new account is reported, it brings down your credit score even more. Just how much it goes down depends on factors like your credit history and how many other recent accounts you’ve opened.

If you have a thin credit profile and you were to open more than one account at one time then you could see a pretty significant drop in your credit score that happens a month or so after your initial drop from the hard inquiries.

Some people feel the need to panic when this happens but they have to remember that their score will eventually go up as a little bit of time goes by.

A credit score will jump up even quicker if those new accounts also helped bring down that person’s credit card utilization and it’s possible that within 120 days you could see a score make a dramatic jump back up so that the credit score rises to a point much higher than it was before that first hard inquiry brought it down.

Related: Does Getting New Credit Cards Hurt Your Credit Score?

Other factors

Sometimes there is not a clear explanation for why your credit score has dropped. It’s possible that after a new account appears on your credit report there is no change to your score or perhaps even your score goes up only to go down a month or two later.

In some cases you may just have to chalk up the change to complicated algorithms that are working in the background. But other times you might just need to look a little bit closer to find the culprit.

It is possible that applying for a new card and opening up a new account could affect other factors in your credit report (besides new accounts) that have an impact on your score. For example, your new account might be affecting your utilization in a negative way and you may not be realizing it.

If you still don’t know what is going on my recommendation would be to just wait 60 to 90 days to see what happens to your credit score. (Obviously, you also want to verify that there are no errors on your report that could potentially explain the drop in your score.)

Also, make sure that you are checking the same type of credit score and the same model. There are different types of FICO scores and it is possible that your score could drop if you are viewing an older or newer version.

Related: How Accurate Are Credit Karma Credit Scores?

Final word

If you’ve just opened up a credit card or two and you’ve seen your credit score take two different drops back to back, don’t worry — this is completely normal. Just wait it out for a couple of months and make sure you are responsibly using your credit cards and you will eventually see your score jump back up very soon.

How To Remove Student Loan Late Payments From Your Credit Report

This is the story of how I was able to remove student loan late payments from my credit report. 

As soon as I found out the amazing travel benefits created by some of the best travel credit cards I was anxious to jump into signing up for new cards and redeeming miles for some amazing trips.

Unfortunately, living abroad in the UK had caused a rift in communication between myself and one of my student loan lenders and I wasn’t aware that my in-school deferment had not been applied.

So one day, as I’m getting ready to start applying for some credit cards, I go to and check my credit score and I see it’s in the 500s and showing SIX late payments! (Six loan accounts were considered separate for payment purposes.)

Thus, my hopes for getting any kind of worthwhile credit card were pretty much gone and I started to deal with the realization that it would take about 7 years for these negative marks to be removed.

There had to be a way to remove student loan late payments…

I figured that there had to be something that I could do and so I started to do some research and slowly but surely started to gain some hope. The following account is how I successfully used the FTC Advisory Opinion on Section 623(a)(2) to get six late payments removed from my credit report.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

First Step: Goodwill Letter

The first thing to know is that these creditors are legally obligated by the Department of Education (DOE) and Fair Credit Reporting Act (FCRA) to report these late payments and are not supposed to change what they report unless what they reported was inaccurate.

So don’t go into this with the mindset that the creditors should just change their mind and do as you ask. With that said, the first step to trying to get these late payments removed is to write a goodwill letter, which is basically just a letter where you contact them and ask them to be sympathetic or understanding to your cause and offer you a second-chance.

If you had a traumatic event like a death or illness take place around that time, this is something you probably want to bring up. Still, some have had success with just “fessing up” and admitting that they screwed up.

If you don’t know what a goodwill letter is or what it should look like just do some basic Google research… there are tons of examples out there.  But for your reference, I’ve included the goodwill letter I sent below.

My Goodwill Letter

To Whom It May Concern,

My name is Daniel (DOB: XX/XX/XXXX) and I have an account with XXXX loans (ref #XXXXXXXXXX) .

I recently had an informative phone conversation with a representative of XXXX and was explained why I had late payments reported on my credit score. Back in the fall of 2014, I was under the impression that a notice of deferment was being sent to my loan providers and that I would not have to worry about my existing XXXX loans until the fall of 2015. However, this notice did not arrive to XXXX until December 2014, over 60 days after I had a payment due in September. As a result, the late payment was reported to my credit score.

Letters from XXXX were sent out to my address in XXXX. However, I was enrolled in school abroad during this time and I had issues with my mail forwarding. On top of that, my email and phone number were not updated with XXXX Thus, I was not receiving any communication from XXXX. (I have since updated both my phone number and email address).

I realize that this was not a mistake made by XXXX; but rather, a mistake on my end for not ensuring that the notice of deferment was sent and received promptly. However, after seeking some advice on how to go about the situation, I was informed that creditors, such as XXXX have discretion to remove negative reports in certain instances. I am hoping that XXXX can understand that while I failed to submit a timely payment, I was enrolled full-time and thus eligible for a deferment.

With that in mind, I respectfully request that XXXX consider removing the late payments reported to the credit bureaus. I am fully committed to maintaining prompt payments and am open to enrolling in auto-payments if such an option would help with the requested removal.

Please let me know if you need any information from me.

Thank you for your time and consideration,

The Response to My Goodwill Letter

The goal of the letter was to show that I was: 1) taking responsibility of the late payment and 1) that I was open to do what I needed to do to assure them that it would not happen again. Unfortunately, I was not successful.

The goodwill letter actually backfired on me a bit. They sent me a response back saying that since there was no mistake on XXXX’s account and that I had admitted fault they were not allowed to remove the late payments from my report.

I was very bummed and kind of regretted even sending in the letter since now it looked like I may have made matters even worse by admitting fault on the record. Yet, I wasn’t quite ready to give up and I decided to do a little bit more research just in case.

Related: How Does Payment History Affect Your Credit Score?

FTC Advisory Opinion on Section 623(a)(2) of the FCRA

And that’s when I stumbled upon the FTC advisory opinion on Section 623(a)(2) of the FCRA which changed everything.

This advisory opinion basically states that a student loan provider is required to both update and correct information provided to credit reporting agencies when that information is provided.

There’s dispute as to whether this means removing late payments entirely from a credit report or merely to updating that the report to reflect that a payment status is no longer delinquent or past due.

There’s a huge difference between the two because in the latter situation your payments may no longer show that they are currently delinquent but in the former scenario your payments are completely removed from your credit score.

Thus, I changed my strategy from employing the nice-guy, apologetic tone (“I screwed up and am sorry”) to going with a more aggressive and authoritative style and actually asserted that this loan provider was in violation of Section 623(a)(2) by not removing my late payments.

The below is the letter that I responded to the loan provider with. This time I sent the letter via certified mail.

August 25, 2015

My Name and Contact Info

Loan Provider Contact Info

Re: Late Payment Removal/  Ref # XXXXXXXXXX

Dear Sir or Madam:

This correspondence is in response to the XXXX August 17, 2015 letter I received regarding my goodwill request to have late payments removed from my credit score report. In the letter I was told that such reports could not be removed due to regulations promulgated by the DOE and the FCRA. Contrary to these assertions, by failing to update previously reported information, XXXX is in violation of Section 623(a)(2) of the FCRA.

I have attached an FTC advisory opinion which interprets Section 623(a)(2) of the FCRA. The issue posed in the advisory opinion is how a lender is to handle a situation when subsequent information updates a report that was allegedly accurate when it was made but no longer is accurate in the present time (i.e., the identical situation I am currently in).

The advisory opinion states that the Section 623(a)(2) of the FCRA addresses the duty to correct and update information by “furnishers,” or persons who furnish information to consumer reporting agencies (“CRA”) such as credit bureaus. In particular, this section requires a person that “has furnished to a consumer reporting agency information that the person determines is not complete or accurate” to “promptly notify the consumer reporting agency of that determination” and provide any information needed to make it complete and accurate. Thus, on its face, this provision requires a furnisher to provide corrected or updated information to the consumer reporting agency that it had reported to originally. This duty extends to all student loan accounts reported to CRAs, regardless of whether they were accurate at one point, because the section requires the furnisher both to “update” accounts as well as to “correct.”

XXXX representatives told me that because the delinquent payments were accurately reported in November of 2014 that any subsequently initiated deferments would not allow for XXXX to update reports to CRAs to show that the payments were not late and actually in deferment. However, Section 623(a)(2) clearly shows that the reports must be updated/corrected regardless of whether they were accurate at one point.* 

All of my XXX accounts that were part of the September 2014 late payments show deferment status effective as of “9/15/14.” Also, I was enrolled full time before any payment in September became due. Therefore, my credit reports do not currently accurately reflect previous payment statuses with XXXX, both as they actually existed and as XXXX has recorded them. I am thus requesting that in compliance with Section 623(a)(2) of the FCRA that the six accounts showing a 60-day late payment in November 2014 be updated and/or corrected and removed.

In the event that these reports are not immediately updated to accurately reflect my payment status during November 2014, I intend on filing disputes with each credit bureau in addition to official complaints with the FTC, CFPB, BBB, and pursue other legal routes if necessary.

Please respond within 14 days of the date of this letter with an update to this matter.

Very Truly Yours,

[*Footnote: For the record, I do not agree that XXXX ever “accurately” reported the status of my loans. Since my July 28th email, I have discovered that all other loan providers timely processed the deferment leaving me to suspect a processing error on behalf of XXXX. In addition to the possible Section 623(a)(2) claim, I intend on disputing the processing of my deferment if need be.]

As you can see, the tone was much different from the email I had previously sent. There are a few points to consider about my situation and the letter I sent.

  • I sent the letter as an attorney (e.g., I signed “Name, Esq.”). That representation in addition to the attaching the Advisory Opinion and supplying my own quasi-legal analysis of that opinion could’ve played a role in lending more gravity to my argument.
  • The footnote above was meant to let them know that I no longer suspected the error to be my mistake (as they reiterated in their original response to my goodwill letter). Since other loan providers had timely processed my deferral (which was not sent from me) I thought I had a good argument that they were the outliers and likely the party who made the mistake.
  • Keep in mind this was for an in-school deferment — it was indisputable that my loans qualified for deferment. I say that because there may be some differences if you are trying to argue that your loans should’ve been in forbearance or some other status allowing for delayed payments. I don’t know that for sure, however. It may not make a difference but that is just something I’m saying to take note of.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

The Response to the Advisory Opinion Letter

In a couple of days I received a letter via snail mail that upon further consideration my payment history was being revised!

Within a few days I logged in to check and my credit report for another matter and noticed it had shot way up — they had removed my late payments!

And what was great was that my credit score had made an astronomical leap. The removal of the late payments coincided with me paying of all my credit card debt and a slew of hard-pull inquiries dropping off my report so my credit score jumped from the 500s to the 800s!

I couldn’t believe the change and I was on my way to getting some pretty great credit cards.

When you research the authority of Section 623(a)(2) and this FTC advisory opinion you’ll come across a lot of varying accounts and opinions. There are a lot of accounts of using this opinion not working and some others who have had success like I did.

Don’t get too discouraged by the negative accounts. I almost never sent in my second letter because it seemed like a wasted effort but thank God that I did… I don’t even want to think about where my credit score would still be right now if I hadn’t.

If you have some late payments that hit while you were supposed to be in an in-school deferment status or in forbearance then I definitely recommend giving this method a try.

Try the good-will letter first and if that doesn’t work then you’re next step could be using the FTC advisory opinion Section 623(a)(2). Remember, there’s no harm in trying.

Please note: I no longer offer services to assist with these issues and due to an extremely high volume of requests, cannot respond to emails on this subject. 

How Accurate Are Credit Karma Credit Scores? [2021]

A lot of people (including myself) rely on Credit Karma to monitor their credit score to make sure everything stays up to par. It’s a very easy and free to use tool so it is very understandable that it is one of the most popular ways to keep track of your credit score. But exactly how accurate is Credit Karma?

In this article, I will talk about whether or not Credit Karma is accurate and some of its potential shortcomings as well as its strengths. I’ll also show you how to find a more accurate credit score that can better predict your credit approval odds.

How accurate is Credit Karma?

Credit Karma is an accurate way to check your Vantage credit score with TransUnion and Equifax. However, there are a few issues with this.

One issue is that most lenders utilize the FICO model and Credit Karma uses the VantageScore Model which means that the scoring system is different from most lenders. So it is not so much that Credit Karma is inaccurate; it is just that it utilizes a model that most lenders do not use.

The second issue is that Credit Karma does not provide you with an Experian score. Many lenders, including many credit card issuers, like to pull your credit score from Experian.

If your Experian credit report has different marks on it compared to your Equifax or TransUnion report, then there could be a large discrepancy between your Credit Karma score and what the credit card issuer sees. You can read on more here about which credit card issuers pull from which credit bureaus.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

What is the VantageScore Model?

The VantageScore Model was originally developed in 2006 and the VantageScore Model 3.0 debuted back in 2013. There is currently a 4.0 model as well but it has not been as widely adopted as it has only been out since 2017. VantageScore Model 3.0 is used for other credit services like Credit Wise, Chase Journey, etc. 

The VantageScore Model Credit Karma uses is pretty similar to the FICO model but it has some key differences. It uses the same FICO range of 300 to 850 for the score and stresses many of the same factors as FICO — it just gives them different weight and has some slightly different criteria for calculating them.

Here are the 3.0 factors according to Credit Karma:

  • Payment history (about 40%)
  • Age and type of credit (about 21%)
  • Credit utilization (about 20%)
  • Balances (about 11%)
  • Recent credit (about 5%)
  • Available credit (about 3%)

Here are the factors for the FICO model.

  • Payment History (35%)
  • Utilization (30%)
  • Credit History (15%)
  • New Credit (10%)
  • Mixed Credit (10%)

Payment history

Just like the FICO model, payment history is the number one factor.

It makes sense the number one concern for a credit score is to determine how big of a credit risk you are. Your track record with paying your bills on time is the number one indicator for that so it is no surprise that it is the most influential factor for both models.

However, payment history appears to be even more important for the VantageScore Model since it weighs in at 40% versus 35% for FICO.

The 3.0 model will not penalize you for collections which have been paid which is a departure from some FICO models. That right there can make a huge difference for people who have multiple items in collections and have paid them off.

FICO models will only allow you to have payment history if you have six months of established history. Meanwhile, you can have payment history under the Vantage model with only one month of payment history. This trips a lot of people up sometimes because they can pull up a credit score with Credit Karma but they still are not able to pull up a FICO score.

Age and type of credit

This is different from the FICO model because account history and the types of credit are two of the three least important factors for FICO. One of the big differences for the VantageScore Model is that it does not consider closed accounts when determining the age of your accounts. FICO will continue to count your closed accounts until 10 years after they are closed.

So your average age of accounts will often be significantly lower with the VantageScore Model. This is why people like me who have opened up and closed a lot of cards have a significantly lower VantageScore Model Score than FICO — the average age of our accounts is significantly lower and it carries more weight.

Credit utilization and balances

Credit utilization is only about 20% of your Vantage score. Meanwhile, it is the second most important factor for your FICO score. So if you have maxed out cards or cards with high balances it should hurt you less for your Credit Karma score but be much more impactful for your FICO score.

It is a little confusing to me what the difference is between utilization and balances, though. Credit Karma states, “[balances] refers to the total amount of recently reported balances (current and delinquent) on your credit accounts.”

So to me it sounds very similar to utilization. I think that this could be more focused on individual utilization, which would be the individual balances on each of your accounts. Regardless, it sounds like it is equally important to keep your balances down for both of these types of credit scores.

Related: Should You Pay off Your Credit Card Balance Each Month?

Recent credit

Your recent credit is going to look at new accounts just opened and also new inquiries. One big difference here is that the Vantage models will combine related inquiries within a 14 day window. Meanwhile, newer FICO versions count multiple credit inquiries of the same type within a 45-day period as a single inquiry. 

Therefore, if it took you 3 1/2 weeks weeks to find an auto loan and you had multiple inquiries within those weeks, that could have had a bigger impact on your Vantage score versus your FICO score.

Available credit

Available credit is the least important factor for the 3.0 model. According to a VantageScore® Solutions report, prime consumers keep $20,000 to $22,000 worth of credit they don’t use. At only about 3% of your score, this factor is almost completely a non-factor.

Is Credit Karma really that inaccurate?

The difference between your FICO Scores scores and your Credit Karma scores can be quite extreme. There are reports of people with Credit Karma scores over 700 with both bureaus but with FICO scores in the lower 600s.

Other times, the opposite might be true. Your Credit Karma score could be much lower than your FICO score. It all depends on the make up of your specific credit profile.

Should I even bother with the Credit Karma score?

Since most major lenders utilize the FICO model, you need to be very cautious about relying solely on your Credit Karma score. As I have shown, in some instances, this score can be really different from your FICO score like when you only have a couple of months of credit history or when you have closed a lot of credit card accounts.

Sometimes a lender might have a hard cut off for approvals or for certain interest rates. For example, if your score is below 700 your interest rate could go up another 1% or 2%. Or if your score is below 650 you might not be able to get approved for a certain loan or card.

In those cases, when you were dealing with hard cutoffs, it becomes very important that you get a truly accurate and up-to-date score. This is especially true if you are dealing with a large sum of money like in the case of a mortgage.

In those situations you would want to stray away from Credit Karma and do what you can to obtain an official FICO score. It will also benefit you to try to figure out exactly which credit score model your lender uses, since there are many different versions of FICO score.

And some point you might actually run into a lender that uses the Vantage score model (many lenders do use it). If they are pulling from Equifax for TransUnion then Credit Karma could be very useful for that lender.

Where can I get accurate FICO credit scores?

There are a few ways that you can get a FICO score.

Many find it easy to sign-up for Experian.com and utilize that to get their FICO score (they offer a free 30-day trial membership). If you are just in it for the free score, make sure that you cancel your membership. 

Sometimes MyFICO offers a free trial so be on the lookout for that.

You can also get one free credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian) once every 12 months from annualcreditreport.com. But note that that is usually just the report (though I’ve been given the score once in the past before).

Many credit card issuers will now allow you to check your FICO score for free. So if you have a credit card account with any of the major issuers like Chase, American Express, Discover, Capital One or many others you should look into checking for a free score.

Credit Karma credit score simulator

Credit Karma has a special tool that allows you to see what might happen to your credit score if you take certain actions. For example, you can predict the effect on your credit score if you open up a new loan or credit card. I have played around with this tool in the past, and found it to be somewhat accurate but nothing that I would definitively rely on.

The biggest shortcoming of this simulator is that it only allows you to tweak one element at a time. In reality, when you make a change on your credit report, several factors are probably going to be affected and that can make a huge difference.

So feel free to play around with the tool but keep in mind that the outcome of your changes could be very different.

So is Credit Karma ever useful?

I think that Credit Karma is still very useful for a lot of people and here is why.

Easy to use

First of all, it is just a very easy to use app and it is a great way to keep track of your Equifax and TransUnion credit reports. If you’re concerned with trying to see how many accounts you have open or how many recent inquiries you have had, then Credit Karma can be extremely useful.

For example, you might want to calculate your 5/24 status and Credit Karma can be a great way to do that (although I’d probably use annualcreditreport.com).

Insights

Credit Karma offers insights when you are reviewing your credit report. These insights will tell you what factors are affecting your score the most, and whether or not those things are positive or negative.

If you already are well-versed in credit reports, then these insights really won’t tell you anything that you don’t already know. But for people who are still learning how credit scores work, these insights can be very helpful.

The insights can also tell you things like if you are paying too much for your interest rates. I have not relied on these type of insights in the past so I am not sure how helpful or accurate they are.

Credit monitoring

It also can be very handy when you are just trying to monitor your credit report. You should get notifications or emails whenever a new account is opened or an account is closed. And you should also get notified in the event you ever have a late payment or some other negative mark on your credit report.

Sometimes Credit Karma can get a little annoying when they send me notifications “reminding” me that my payment history is still 100%. These emails tend to give me mini heart attacks because all I see is a notification about my payment history and I could do without those.

Disputing items

You can also use Credit Karma to dispute items on your credit report. So if you are in the process of trying to clean up your credit report, then Credit Karma could actually be a good way to start. Typically, I like to dispute the items directly with the credit bureau. However, it is convenient to utilize a third-party like Credit Karma for a lot of people.

And even if you don’t utilize Credit Karma to initiate the dispute, it can still be a very useful way to get organized when preparing to dispute an item.

Debt repayment calculator

You can utilize the debt repayment calculator to figure out how long it will take you to pay off some of your bills.

Unclaimed money

Credit Karma also has a feature that allows you to view if you have any unclaimed money. You might be entitled to collect a couple of hundred bucks and not even realize it.

Final word

Credit Karma is not the most accurate tool that you want to use for most lenders since they use a different scoring model (FICO). Generally speaking, Credit Karma can give you a good idea of where your credit score stands. However, if you have had a lot of activity such as multiple closed accounts, the score that it gives you will often be skewed and much lower than what your FICO score is.

With that said, I still think that it is a great tool to use that can help you monitor your credit and it is free so there really is no hurt in giving it a shot.

How Do Credit Inquiries (Hard Pulls) Affect Your Credit Score?

A lot of people often wonder if credit inquiries hurt their credit score or wonder what the difference is between a hard pull and a soft pull. There’s a big difference between the two and becoming informed about what kind of credit inquiries affect your credit score (and how much they do) can help you make better decisions when pursing credit cards in order to preserve your credit score. So here’s the low down on how credit inquiries affect your credit score. 

What’s a credit inquiry?

An inquiry is when an an entity pulls (or retrieves) your credit report for review. There are two different kinds of inquiries or “pulls”: soft pulls and hard pulls.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

What’s the difference between a hard and soft pull?

A soft pull is an inquiry that does not do damage to your credit score. It can be performed even without your permission. 

A soft pull will still show up on some credit reports but it should never result in a drop in your score or be categorized under the “inquiry” category that really matters to lenders (the one where hard pulls go). Soft pulls usually result from credit card pre-approvals, personal credit checks from places like Credit Karma or Credit Sesame, and various other checks like those from employers. (Employers must always receive permission to conduct a credit check according to the FCRA, however.)

A hard pull is a different story. A hard pull on your credit can only be done with your permission and will almost always result in a temporary drop of your credit score and is something that you want to constantly keep an eye on.

What counts as a hard pull?

Generally, any time you apply for a loan, whether it be a home loan, car loan, student loan, personal loan, business loan, etc., you’ll incur a hard pull (see below about combined inquiries). Also, opening new credit cards (even many store credit cards), some bank and credit union accounts, new phone accounts, new cable/internet service accounts, and new utility accounts can often result in hard pulls.

Even getting auto insurance quotes, applying for apartments, and renting from rental car agencies (usually only if paying cash) can result in hard pulls to your credit. And finally, if you ever agree to any kind of background check (especially one from a financial institution), there might be a chance for a hard pull. 

Sometimes hard pulls occur due to error, so you should always try to verify whether or not an entity will perform a hard pull and try not to take “we don’t know” as an answer. Someone within the chain-of-command should always be able to provide you with a clear answer.  

How do hard pulls affect your credit score?

FICO determines your credit score in the following ways:

Hard inquiries fall into the “New Credit” category that accounts for 10% of your score. Other factors in this category are:

  • How many new accounts you have
  • How long it’s been since you opened your last account

I don’t think FICO releases exactly how these factors ultimately impact the 10% category of new credit but they have provided us with some guiding information that I’ll discuss below.

Related: How to Raise Your Credit Score by 200 Points

Why does an inquiry hurt your credit score?

You always have to look at these things trough the perspective of a lender. When people are pursing credit, there’s usually a reason why. They want access to credit in order to use that credit. For someone who hasn’t shown an established history of managing credit, the pursuit of credit is questionable since they will likely be using that credit and it’s not clear that that they will be able to manage it (i.e., pay it back).

Also, if someone is pursuing multiple lines of credit, it’s a sign that they might be in financial trouble or are getting ready to accumulate a lot of debt, which might make them a risk until they prove they can handle their credit. That’s why inquiries hurt your score because they’re meant to signal to lenders that you are doing something that could potentially make you a credit risk.

And that’s why the negative effect is only temporary and doesn’t affect people with longer credit histories as much because once you’ve proven you’re responsible, your pursuit of additional credit is no longer indicative of a credit risk.

How long do hard inquiries remain on your credit report?

Hard inquiries will remain on your credit report for two years.

How much do credit inquiries affect your credit score?

Generally, a new hard inquiry will temporally drop a credit score by 2 to 5 points.

The more established your score is the less the impact a hard credit inquiry will have. This means that if you have an established and rock solid payment history with multiple accounts spanning 10+ years, then a hard inquiry will have a very small impact on your credit score. In fact, it’s possible you may only experience a negligible (and some even say nonexistent) effect on your score in some instances.

However, if you have a bad credit score and little to no history then the impact will be higher — sometimes much higher.  Some people have reported drops of 12 or more points from inquiries.

In addition, if you have multiple hard inquiries and new accounts, it’s possible that each new inquiry will count more against you. The reasoning goes back to you being considered a credit risk.

Consider that people with 6 or more inquiries on their report can be 8 times more likely to declare bankruptcy than people with no inquiries. If you’ve got an established credit history obviously this stat wouldn’t apply and FICO would probably realize that. But if you’re just starting out, it’s easy to see how so many inquiries could significantly damage your credit score.

How long will hard inquiries affect your credit score?

Hard inquiries will only affect your FICO credit score for 12 months. This is tremendous news for those of us who have racked up many credit card inquiries over the past two years. However, you don’t always have to wait for a year for hard inquiries to lose their effect.

It’s generally accepted that hard inquiries begin to lose a lot of their negative effect on your credit score after about 60 to 90 days. This is why some people wait 90 days in-between applying for multiple credit cards. This probably is somewhat dependent on your credit history and score. The better those things are the less amount of time it will probably take for your credit score to rebound or for the inquiries to lose their effect.

Do hard pulls hurt my chances of getting a mortgage?

First, if I were planning to buy a house I’d probably sit out from applying for credit cards for 6 to 12 months, leaning more towards 12. This would definitely be the case if I knew my potential lender used FICO.

But this might still make you curious about the impact of inquiries that are over one year old. Would those count against you when trying to get a mortgage?

I’ve spoken with a (respected) mortgage lender about this issue and this is the response I received verbatim:

“We don’t really look at the number of inquiries but rather if those inquiries have resulted in new debt. If they are just inquiries that didn’t result in new debt then we don’t care about them.”

That means that they are more concerned with installment loans like personal loans, car loans, etc., and wouldn’t care about additional credit card accounts (unless those potentially resulted in new debt).

I know lenders can vary dramatically, so don’t take this advice to be universal. However, it’s good to know that even if you have inquiries that will take another 12 months to fall off your report (i.e., inquiries over 1 year old), they may not have any negative impact on you getting approved for a mortgage. Again, always check up on this stuff with your local real estate experts and lenders, since I’m sure this varies.

Some hard pulls on your credit are combined

FICO can detect when you’re shopping around for the best interest rate for an installment loan for a house, car, or even student loan (I’m not sure what other loans qualify for this). When it detects this, it lumps the inquiries into one. So, for example, if you went car shopping and had your credit pulled 8 times in a week, those inquiries should only impact your credit score as if they were one single inquiry.

Related: Can You Pay for a Car with a Credit Card?

The time period in which inquiries will be combined varies based on the credit score model. Generally, the time period is 30 days but it can be as soon as 14 days or as long as 45 days. Personally, I’d try to keep the inquiries as close together in time as possible (like within 7 days) but that’s just because I like to play things like this conservatively.

Another instance when hard pulls can be combined is when you apply for credit cards from the same bank at the same time. Some banks, such as American Express, will allow you to apply for multiple cards at once and the bureaus that receive the credit pulls will combine them.

This doesn’t work 100% of the time but if you apply for credit cards within minutes of each other, you’ll have a good shot at combining hard pulls and thus reduce the negative impact on your credit score.

Can you remove hard pulls from your credit report?

If there’s a hard pull on your credit report that you know is not supposed to be there you can dispute it. There have been controversial ways to remove hard pulls in the past but I’m not going to get into those since they are mostly dead (if not all dead) and they can often be more hassle than they are worth.

Keep in mind that if you aggressively dispute things on your credit report (especially if you do so without justification), your credit report can become subjected to heightened fraud protections. This can be a real pain when you’re pursuing multiple credit cards because it might bring unwanted attention to your applications and lead to denials, since you’ll often have to call in and may not be able to get auto-approved. Just something to think about.

Remember, it’s still just 10% 

Remember that credit inquiries only make up a portion of your “new credit” category and that category only counts for 10% of your total score.

With that said, if you have a lower credit score and/or a thin credit profile you may want to try to space out credit card applications (that don’t combine inquiries) to avoid huge dips in your credit score. Spacing them out every 90 days or so would be a good idea. Even if you do push it too quickly in the beginning and cause your score to take a huge dip, don’t worry. That dip should only be temporary. Just take a break from applications for a few months and you’ll probably see your score rise back up.

And as stated, if you have a high credit score along with an established credit history, inquiries will probably be a non-issue for you.

Can I avoid hard pulls when applying for a credit card?

Yes, some people have luck avoiding hard pulls when they apply for credit cards by utilizing something called the shopping cart trick. You can read more about how this trick works here.

What to Bring When Buying a Car (Detailed Checklist) [2021]

Buying a new vehicle can be an overwhelming process but you can make things a lot easier on yourself by knowing what type of items to bring and what to expect.

In this article, I will break down everything you need to bring when buying a car.

Before you head to the dealership

Be in a good state

Sometimes buying a new car can be a long process that drags out for several hours. (I’ve been involved in vehicle transactions at dealerships that have taken four hours or so to complete for various reasons.)

For that reason, you want to make sure you are well-rested and well-fed before heading to a car dealership. (Think about heading to the dealership like you would about preparing to take an important exam like the SAT.)

There’s nothing worse than being tired and hungry as you deal with a bunch of bureaucratic back-and-forth and wait for endless piles of paperwork to be filled out.

So make sure you take care of yourself the morning you head out to the dealership and you might even want to bring some snacks and drinks along with you.

Tip: You can also use hunger to your advantage by scheduling an appointment a couple of hours before lunch so that the salesperson might be more willing to give in to hunger as they work to finish your deal.

Contact your insurance company

I would recommend to call up your insurance company before you head over to the dealership and notify them that you are planning on purchasing a new vehicle.

This is a good idea because they can put you on notice of any requirements that need to be taken care of such as adding the new vehicle to your current insurance (which I will talk about below).

It’s also a great idea because you can get a quote on what your new insurance rates might be.

They will likely ask for the VIN but you should be able to get that by calling the dealership or even finding it online.

Get quotes from other dealerships

If you know what type of vehicle you want to purchase, do some research and find some prices from other nearby dealerships.

This will help you negotiate your price down and give you a better idea of the range of prices that will be negotiable.

Sometimes you can use portals like the American Express Auto Purchasing Program to scan different dealerships for great deals.

One tip I have is to email a handful of salespersons with all of your details and have them essentially bid for your business.

Items to bring when buying a car

A “bulldog” companion

The number one item to bring when buying a car is a companion who can help you sniff out the BS and arrive at a good deal.

Try to find someone who is direct and confrontational. If that is already you then great but if you are not confrontational, you might get walked over by an experienced salesperson (often without even realizing it).

Your companion’s main mission is not to simply give you company during the buying process or even to ask relevant questions about car features.

Instead, you want your companion to focus on actively questioning and calling out your salesman as you try to get the best deal possible.

My rule of thumb is that if your salesperson is at ease and comfortable throughout the entire encounter, chances are you are leaving a good deal of savings on the table.

Bringing a so-called “bulldog” along with you will ensure that you don’t miss out on a good deal and fall victim to a charismatic salesperson.

Driver’s license

You should already have your driver’s license on you at pretty much all times but you especially want to bring it with you to the dealership when buying a new car.

The dealership is going to want to make sure that you are a legally licensed driver before they handover the keys to a new vehicle.

So make sure your driver’s license is active and in good standing.

Proof of insurance

You’ll also want to have proof of insurance.

No respectable car dealership should allow you to drive off with your vehicle if you do not have proof of insurance.

Remember, as soon as you sign the bill of sale, that vehicle becomes yours and you are liable for it which means that if you were to crash the vehicle on your way home you would be responsible for the loss.

The big question is should you add your new car to your insurance policy before you purchase the car or after?

If you know exactly which car you’d like to purchase, you can contact your insurance provider and add the car to your insurance before you ever leave the dealership so you’ll have insurance from the very beginning.

Basically, you can wait until the deal is going to be finalized and then contact your insurance company right at that moment and add the new vehicle.

If you have already contacted your insurance company before heading over to the dealership, they should already have things in order and should be able to send over confirmation via email or fax in a timely manner.

If you don’t plan out your insurance in advance, it is still best to get some details regarding how you can transition your current insurance over to the new vehicle.

Typically, you will have a grace period for adding the new vehicle to your insurance. This grace period might be around 2 to 4 days but some insurance providers might have a much wider window.

Be sure to contact your insurance provider to find out exactly how long you have.

Form of payment

If you are planning to purchase your vehicle with cash or making a down payment, then you will need to have the proper form of payment with you.

Some people could purchase a car with actual cash but a lot of times it is common to use something like a cashier’s check for a large purchase such as a vehicle.

You could also consider writing a check but checks can be problematic because they take so long to clear so a cashier’s check would almost always be preferred.

You might also think about purchasing the new car with a credit card. Not all dealerships will accept credit cards but there are some tips and tricks to using a card to purchase a vehicle from a dealership.

Tip: Check out the free app WalletFlo so that you can optimize your credit card spend by seeing the best card to use! You can also track credits, annual fees, and get notifications when you’re eligible for the best cards!

If you are planning on financing your vehicle then you will need to take some necessary steps to ensure that you have the proper documentation when you visit the dealership.

There are a few different routes you can take for financing and they will determine how you prepare.

Pre-approved financing

To make the transaction as clean as possible, you should consider lining up your financing before you even arrive at the dealership.

You can do this by narrowing down your vehicle options and getting a price range from the dealership (either online or by calling).

You can then contact your lender to get pre-approved so that you will have a guaranteed loan up to a certain amount with a specific interest-rate.

When going this route, always make sure that you are getting an approval for financing based on the walkout price which includes TTL (“tax, title and license”).

You can also work backwards.

With this method, you will tell the credit union the maximum amount you can afford for a monthly payment. They can then give you an amount for your entire loan and you can find cars within that range.

Pre-approved financing is definitely the way to go if you want to streamline the transaction.

Tip: Contact local credit unions for some of the most competitive interest rates.

Financing at the dealership

Allowing the dealership to finance your transaction can be advantageous sometimes as they can offer you some great rates like 0% APR.

If you choose to let the dealership take care of the financing for you, it’s a good idea to go in with the following documents.

Credit score and report

You definitely want to check all of your credit scores before you head to the dealership so that you know what type of credit you are working with.

It is also a big help if you have your credit score and report on hand for all three credit bureaus: Equifax, Experian, and TransUnion.

You can get your (non-FICO) TransUnion and Equifax score through CreditKarma and you can also get your Experian score here.

This will help you know for sure what your credit score is and you will know what credit bureau is the best bureau for the lender to pull your report from.

Just keep in mind that lenders will pull from different types of credit scores so the credit score you bring may not line up with the scores that the lenders pull for you.

But by having your credit score and report on you, you will at least have a ballpark idea of what your score should be and you can verify negative items on your report.

Most lenders use the FICO model so try to get at least one of your FICO scores.

Proof of income

If you are relying on the dealership to find you financing, some of the lenders may require you to show proof of income in order for you to get approved for your loan.

Typically, you can prove your income with the following:

  • Paycheck stubs
  • Bank statements
  • W2

You may also have to show proof of residence which can be shown with different types of documents including recent utility bills, credit card statements, etc.

It’s best to call ahead to the dealership to find out what their lenders may require.

A list of references

If you have a questionable track record such as poor credit or a lot of negatives on your credit report, you might have to supply a list of references.

Try to have a list of individuals who do not live with you or are not related to you on hand just in case they are needed. Typically, you will need to provide a phone number, address, and explain the relation to you (e.g., co-worker).

Discount information

If you plan on taking advantage of a discount then be sure to print out the discount or have a physical copy with you.

You might also be able to pull up the discount on a mobile device but it will make things easier if you have a hardcopy that you can hand over.

Keep in mind that car dealerships are always looking for ways to get out of these discounts so be prepared to state your case as to why you are entitled to a discount.

Pay very close attention to the fine print and to any eligibility criteria such as eligible vehicles or dates. Be prepared to call corporate to sort out any disagreements over the terms and you might even want to call them beforehand to verify the validity of the discount.

Rebate eligibility documents 

Many dealerships offer special rebates for folks like military members, students, etc.

In some cases, you might need to provide proof of your status such as a verification of enrollment for students or active military ID.

So be sure to call ahead to see what type of documents you will need for your proof of eligibility.

Notes on your vehicle

If you already know that type of vehicle you plan on purchasing and have a clear idea on the features, you should bring along some type of print out with all of those features listed.

It will be helpful to break them down into two categories: must-haves and wish list.

Just in case something comes up and you end up having to look at different vehicles, you will have a feature list already on hand to compare the other cars to.

Buying a Car Out of State

Purchasing a vehicle out of state is a little bit more difficult at times because there is a higher suspicion of fraud and you may have to deal with different regulatory rules.

Inspection (for used vehicles)

Before you drive out of state to purchase a used vehicle, it can be a good idea to have someone inspect the vehicle for you.

It’s not uncommon to hire a local mechanic to evaluate the condition of your potential used vehicle. They should even be able to test drive it for you.

Taxes

Some states will not charge you tax on a vehicle purchase. These include states like New Hampshire, Oregon, Delaware, Montana and Alaska.

If you purchase a car from a state with no sales tax but register it in a state with sales tax, you will likely still owe sales tax.

Title and registration

After you purchase a vehicle from out of state, you will have to pay for a new title and registration in your home state.

You should check with your home state to see about the grace period for how long you have to wait until you need to complete the title and registration.

The time allotted varies but you can expect 30 days or longer and some states.

Trading your vehicle in

If you plan on trading in your vehicle then you will need to bring some additional documentation with you.

Current certificate of title

One of the most important documents you will need is the certificate of title (pink slip).

This is the document that contains information like your VIN, year, make and model, ownership, etc.

On the back of the document, you’ll see how to assign ownership to the buyer and typically a dealership can take care of these fields for you or at least walk you through it.

If you do not currently have your title just contact your local DMV and they should help you get a duplicate (for a fee usually).

Make sure you have the current certificate of title if you are planning to trade in your vehicle.

Current vehicle registration

It will also help if you can provide current vehicle registration.

You should still be able to trade in your vehicle if your registration is expired but you might have to cover the cost of the registration (even if that means the buyer factoring in the price without telling you).

A polished (and clean) vehicle

If you have any scuffs or small dents on the exterior consider paying someone to rub those out or fix them because those can cost you a lot on your valuation.

It’s also not a good look if you try to trade in your vehicle with tons of trash or debris scattered in your vehicle. Many people prefer to have their car detailed before they sell it for optimal presentation.

Service records

Buyers of used vehicles are very interested in the service records and repair records. You can build a stronger case for a higher valuation if you have a detailed and accurate record of all of the services and repairs.

Account number for loan

If you still owe money on the car that you are trading in, then make sure you have all of the loan account information.

Buying a car FAQ

Do you need a driver’s license to buy a new car?

No, but you will need one to drive the vehicle from the dealership to your home.

Can I add my new card to my insurance before I leave the dealership?

Yes, your insurance provider should be able to add the new vehicle to your insurance before you drive off.

Do I need insurance to purchase a new vehicle?

Most dealerships will require you to have insurance before they allow you to drive the vehicle off the premises.

What forms of payment are accepted at a car dealership?

You can pay for your vehicle in a variety of ways including cash, cashiers check, and even credit cards.

Will I have to show proof of income?

If your credit is suspect, you may have to show proof of income which you can do with the following documents:

– Paycheck stubs
– Bank statements
– W2

What do I need to bring when buying a car?

– Someone to help you negotiate (if needed)
– Driver’s license
– Proof of insurance
– Form of payment
– Financing documents
– Credit score and reports
– Proof of income and list of references (if needed)
– Discount information
– Rebate eligibility documents 
– Notes on your vehicle


Final word

Purchasing a new car can be overwhelming but if you break down everything step-by-step you can be well prepared and the entire process will be a lot smoother than you might think.

How to Mail a Check Safely (And Other Alternatives)

If you are like millions of people then at some point you will probably need to send off a check in the mail (even in 2021).

Unlike cash, sending off a check in the mail is much safer and acceptable. But that doesn’t mean that you should not take certain precautions to ensure that your check arrives safely.

Below are some different tips to help you mail your check safely. I’ll also offer some alternatives that you can take instead of sending a check.

Get the check fundamentals down

Understand the parts of a check

Because checks are sent so often, it’s easy to forget the importance that your check contains a lot of your sensitive personal information such as your bank account number and address.

One worry is that someone could steal your mail and have access to that information but sometimes you may not even want to share that information with the individual you are sending the check to (I will discuss some ways to get around that below).

So make sure you are versed in what information is displayed on a check before you send one out. If you need a refresher on the different parts of a check, click here.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

Fill out the check properly

You need to make sure that you properly fill out your check before sending it off.

I know this sounds obvious but if you do not properly fill out certain fields on the check, sending out a check could be as risky as sending cash in the mail!

For example, if you wrote out “Pay to the Order of: Cash,” your check could be cashed or deposited by anybody. 

It would be just like sending over a wad of cash in the mail.

You also want to take a step to avoid your check getting “washed” which is when someone alters/removes the ink and changes elements on the check such as the name and amount.

One easy way to do this is to use an indelible pen which is essentially a writing pen that has ink that cannot be removed.

You can also increase the security of your check by writing “for deposit only to account of payee” on the back of the check (in the endorsement section).

This will prevent the check from being signed over to another individual which means that it will just be one step harder for someone to cash it if they are not the named recipient on the check.

That’s probably one of the most vital tips for sending a check securely through the mail.

Use the right envelope(s)

The best practice for sending off a check in the mail is to use an inconspicuous envelope that does not allow other people to see inside.

It’s not the best idea to send a check in an envelope that could easily be identified as some sort of special occasion envelope.

For example, let’s say you were sending off a birthday check to a family member and you are sending it in a bright orange envelope.

That is going to call extra attention to your mail and so you would typically want to avoid that.

You also want to avoid thin envelopes where a light could be shined through, exposing the contents. A cheap, basic white envelope is typically not a good choice for mailing a check.

I would recommend using some sort of business envelope that gives the contents of your mail a bit of privacy. You can find a large pack of these on Amazon for around $20. You’ll probably want the standard size number 10.

These envelopes come in different types but generally they have some type of security tint on the interior of the envelope that makes it much more difficult to detect what type of documents are inside.

If you want to take the security step even further you could also purchase a thick envelope like some sort of bubble mailer. These can help make it more difficult to discover what is on the inside and they can also weatherproof your check.

Wrap up the check

Regardless of the type of envelope that you sent off your check with, you probably want to consider placing the check inside a folded letter of some sort.

This could be a blank piece of printer paper or it could be something like a cover letter but it is good practice to not send a check as the only item in an envelope because it could make it easier to detect.

Drop your check off

Anytime you are sending something valuable through the mail, especially something like a check, it’s a good idea to drop the check off at the post office or in a post office collection box.

You could also use USPS collection boxes that you find in various parts of your local town but those may not always be as reliable as the ones located in or at a post office.

If you do use one of those collection boxes then try to put your letter in them just before pick up and avoid dropping your letter off in the evenings or on weekends when the collection boxes may not be served.

It really is a good idea to go to the post office if you live in an area where anybody could access your mailbox.

If you are worried about someone stealing your mail and for some reason you were not able to make it to the post office, consider waiting for the mailman to arrive and walking your mail to him/her personally.

Be careful when relying on collection boxes located outside of post offices.

Send via certified mail

If you need verification that the recipient received your check then you might want to consider sending off your check via certified mail.

Certified mail provides the sender with a mailing receipt and electronic verification that an article was delivered or that a delivery attempt was made.

This is a very smart option whenever you are dealing with something like a deadline because you can verify when the check was delivered/received.

Tip: If you combine sending off a letter certified with bubble mailer and a security envelope along with the measures above such as indelible ink and additional endorsement information, you will be sending a check off about as securely as you can.

You may not need to do that for every check you send off but if the check is particularly important or you are extra nervous those can be good steps to take.

An example of a certified mail receipt.

If the check never arrives

If for some reason your check never arrives then you will need to contact your bank and make a stop payment on the check.

Simply explain to the bank that you sent a check in the mail and that it never was received by the recipient and the bank should be able to handle the rest.

Sometimes these type of situations can drag out so be prepared to devote some time to resolving it if you run into trouble.

You need to keep in mind that your check has your bank account number on it so if a check ever goes missing, then somebody out there may have your bank account details.

This means that you will want to proactively monitor your bank account and any other associated accounts to ensure that nothing is happening.

If you are truly worried about someone hacking into your account then you might be able to talk to your bank about getting a new account number based on the fact that your bank number was potentially exposed.

Alternatives

While sending a check in the mail is not that risky especially if you take the steps above, you still might want to consider other payment methods that offer better privacy and security.

Money orders

Money orders are often a solid alternative to sending a check.

Typically, you have to pay a small fee to get them issued but that is generally around $1.50 so it’s not a huge inconvenience.

You can purchase money orders from the post office but you can also purchase them from other places such as grocery stores or even Walmart.

Money orders require identification to be cashed but money orders have an advantage over checks in that they will not have all of your personal information.

So even if someone did steal your mail containing a money order, they would not have access to your bank account number. In addition, it’s possible to track the money order to ensure that it has been cashed.

Cashier’s Checks

Cashiers checks are very similar to money orders but there are some key differences.

Money orders usually are for smaller amounts while cashier’s checks can be for much bigger amounts. (Someone once purchased a vehicle from me with a cashiers check for $20,000.) Some people might even close on a home with a cashiers’ check.

Cashier’s checks are also issued by a bank. So if you were to send one, your bank will either hold or remove the funds from your account and back the check.

And because they are issued by a bank that means you will need to have a bank account.

Cashier’s checks will also cost more money although you can still get them for only a few dollars.

Ultimately, cashier’s checks will often be needed when the recipient of the funds desires an extra level of guarantee or security. But they can be a great way to transact with large amounts of money without having to walk around with a lot of cash.

Consider electronic payments

Nowadays, it is easier than ever to send money electronically. There are so many different apps you can choose to use like PayPal, Venmo, Cash App, etc.

If you want to send money to a friend or family member I would highly suggest you look into one of the electronic options.

Also, if you want to send a payment through the mail in the form of a check but would like to use a credit card to authorize that payment in order to earn valuable credit card points, consider using a service like Plastiq.

Finally, if you are sending a large sum of money then you might want to consider doing a wire transfer. There will usually be a fee to make a wire transfer but sometimes the fee is waived if you are sending over a certain threshold such as $5,000.

FAQ

Can you send a check in the mail?

Yes, it is perfectly acceptable to send a check in the mail but you should attempt to do so securely.

How can I send a check in the mail securely?

– Use an indelible pen 
– Write “for deposit only to account of payee” on the back of the check
– Use an envelope with security tint on the interior and/or bubble mailers
– Drop the check off at the post office and send it via certified mail

Should I send a check UPS or FedEx?

You can send your check via UPS or FedEx but it will be a little bit more costly than it would if you sent a check with USPS.

How Long Do Hard Inquiries Stay on Your Credit?

A very common question that I see come in often is: how long do hard inquiries stay on your credit?

It’s an important question and understanding both the short-term and the long-term impact of a hard inquiry is very important.

Here’s a rundown of everything you need to know about hard inquiries, including how long they remain on your credit report.

Credit score basics

Most lenders use the FICO model, so that what I’ll use in this article.

Your FICO score is determined based on the following categories:

  • Payment History (35%)
  • Utilization (30%)
  • Credit History (15%)
  • New Credit (10%)
  • Mixed Credit (10%)

You can find out more about how your credit score is determined here. 

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

The “New Credit” category

As you can tell by the breakdown above, payment history is the #1 factor that affects your credit score. Second is credit card utilization (which is how much of your current credit limits you are using).

So where do hard inquiries fall?

Hard inquiries fall into the “New Credit” category which accounts for 10% of your score. Other factors that are considered in this category are:

  • How many new accounts you have
  • How long it’s been since you opened your last account

So it’s important to remember that hard inquiries only affect a portion of 10% of your total credit score.

That’s not a lot but that doesn’t mean that you should disregard the impact of hard inquiries.

While the numerical impact may be minimal, having too many of these on your credit report can make getting approved for credit and good interest rates very difficult.

So it is vital that you properly manage the pace at which you incur hard inquiries.

Tip: Use WalletFlo for all your credit card needs. It’s free and will help you optimize your rewards and savings!

How long do hard inquiries stay on your credit report?

Hard inquiries will remain on your credit report for two years.

On occasion, hard inquiries will not drop off your credit report or they may take extra long to drop off. If for some reason you see a hard inquiry on your credit report that is over two years old you should dispute/report it as inaccurate ASAP.

How much do hard inquiries affect your credit score?

Overall, a hard inquiry will usually drop a credit score by 2 to 5 points.

There are some additional things to consider about this.

Good credit scores are affected less

The more established your score is the less the impact a hard credit inquiry will have.

Let’s say that you’ve got a credit report with 100% payment history and multiple established credit lines with ages over 10 years.

In that case, a hard inquiry will have a minimal impact on your score of maybe only a couple of points.

Some even say you can even get away with no damage to your score at times.

Still, I would generally expect there to be some type of dip in your credit score after getting a hard inquiry even if you have a superb credit report.

Bad credit scores are affected more

Let’s say you have a very weak credit profile. Maybe you have a low credit score and little to no credit history.

If that’s the case, then the overall impact from the hard inquiry may be much worse.

It’s possible that your score could drop 10 points or more. This can be very discouraging to people trying to build up their credit score but as shown below the negative impact is only temporary.

Lots of new inquiries will make it worse

Finally, let’s say that you’ve just opened up a hand full of credit cards over the past few months.

In that case, you would have several back-to-back hard inquiries.

When you get an additional hard pull, you’ll probably feel the sting of that hard pull much worse than someone else with fewer inquiries.

And it makes sense that this would be the case.

If you are aggressively applying for credit lines there is a good chance that you are in a tough financial position. Credit card enthusiast aside, most people don’t go around applying for multiple credit lines when everything is gravy.

Therefore, banks will be more worried about lending to you and that is why the credit score drops.

How long do hard inquiries affect your credit score?

The short-term

Hard inquiries begin to lose much of their negative impact after about 60 to 90 days.

This is why some people wait 90 days in-between applying for multiple credit cards.

If you are trying to apply for a number of credit cards in order to maximize your rewards, then I would recommend to wait 90 days between applications.

The long-term

Hard inquiries will only affect your FICO credit score for 12 months.

FICO discounts hard pulls entirely after 12 months, so if you find your credit score lower than you think it should be, you can rule out hard pulls as the cause after one year from your latest hard pull.

Banks still looks at these

One extremely important thing to know is what while FICO may not factor in your inquiries that are over a year old, banks will.

Many banks are interested in seeing how many new accounts and how many new inquiries you have over the past two years.

If you’re applying for a credit card, you might have to try to explain why you have so many credit inquires.

The reason is that there are statistics that show that people with many inquiries might be less responsible and more prone to bankruptcy.

So just because hard pulls will lose their affect on your FICO score after 12 months, that does not mean that you’re in the clear with every financial institution.

Can I avoid hard pulls when applying for a credit card?

It is possible to avoid hard pulls when applying for credit cards. Once upon a time you could utilize some thing called the shopping cart trick but that doesn’t seem to be as reliable as I once was.

Some issuers such as American Express will not always perform a hard pull so by applying for their credit cards you can sometimes avoid the hard inquiry.

If you are concerned about hard inquiries then you can always do a little bit of research to see what credit bureaus are pulled by banks when you apply for credit cards.

By knowing which credit bureaus are pulled, you can strategically apply for credit cards while minimizing the impact from the hard inquiries.

FAQs

How much do hard inquiries affect your credit score?

A hard inquiry will generally drop a credit score by 2 to 5 points. However, if you have a weak credit profile or have multiple recent inquiries the negative impact could be much worse such as over 10 points.

How long do hard inquiries affect your credit score?

Hard inquiries begin to lose much of their negative impact after about 60 to 90 days. However, they will only affect your FICO credit score for 12 months.

How long do hard inquiries show up on your credit report?

Hard inquiries will remain on your FICO credit report for two years. However, they will only affect your FICO credit score for 12 months.

Final word

Hard inquiries stay on your credit report for two years but lose their impact after 12 months. But you still need to be mindful of how these hard inquiries will make lending institutions view you as a credit applicant.

How to Raise Your Credit Score by 200 Points [2021]

Are you trying to improve your credit score by 200 points or more? Are you wondering what is actually possible and realistic in terms of improving your credit profile?

Well, I once increased my credit score by 200 points in a matter of months and so I am uniquely qualified to tell you how it can be done.

It’s definitely not something that everybody can do but there are different steps you can take to at least come close to your credit goals.

In this article, I’ll break down everything you need to know about boosting a credit score by a couple of hundred points.

How your credit score is calculated

Before jumping into the different ways to bolster your credit score and credit report, it helps to have a general understanding of how your score is determined.

FICO determines your credit score in the following ways:

  • Payment History (35%)
  • Utilization (30%)
  • Credit History (15%)
  • New Credit (10%)
  • Mixed Credit (10%)

I’ll show you how each of these factors can be improved below but the key take away is to note that not every factor is weighed the same (or even close to the same).

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The strategy

The trick with raising your credit score is that you have to strategically address the deficiencies in your credit score in order to see maximum benefit.

For example, if payment history is dragging you down and you are focusing on getting your utilization down from 30% to 5%, that is only going to do you so much good.

There is rarely a “one size fits all” approach to improving your credit so you want to take each factor and analyze it individually to see where your best opportunities for improvement are.

Factors to improve your score by 200 points

Below are the factors that you want to think about when trying to improve your credit score by a large amount. You won’t need to address all of these factors but it will help to know which ones to pursue and how much they can benefit your score.

Payment history

Payment history is the number one factor that determines your credit score.

The harsh truth is that in most cases if you have missed a payment or multiple payments and if that is the main blemish on your credit report, there may be nothing you can do except wait for that negative mark to diminish.

Late payments will take seven years to disappear from your credit report which sounds very depressing but the good news is that the full negative impact from the late payment will begin to diminish much quicker than seven years.

How badly a negative payment will affect you depends on a few factors.

One major factor is how late the payment was.

A late payment of 30 days is much less worse than a late payment of 90 or 120 days. Also, having one isolated late payment is not as bad as having multiple late payments.

So if you have several late payments and some of those are 90 days or more, you will need to keep your expectations realistic because your path to a 200 point increase is going to take much more time.

Another aspect to consider is that different credit models will penalize you differently for late payments.

The most recent model known as the FICO 10 increased the penalty for late payments but that model will likely not be used widespread for a while because it is so new.

If you don’t want to just “wait out” the effect of your negative payment and want to be proactive, one of the first things that you can do is send a goodwill letter.

This is basically a letter that just asks the entity that reported the late mark to be sympathetic and remove the late payment.

Many times this is a “Hail Mary” approach because many businesses will not remove the late payment. But because it is so easy to draft a goodwill letter and to send it off it is usually recommended to give it a shot — you never know if luck might be on your side.

Another approach is to do some research of your own to see if there is any argument that your late payment should be removed.

I did this back when I had late payments removed from my credit report for student loans. Admittedly, I have a background in law so this was more practical for me but I don’t believe you need to go to law school to attempt it.

I was able to find some regulations that I believed called for my late payments to be removed and I sent a firm letter to the financial institution and they ended up removing the late payments.

This helped catapult my score and it is the main reason I was able to increase it by over 200 points.

In some cases, you can take a more aggressive approach and hire an agency or an attorney to contact the business/collections and request the late payment to be removed or negotiate some type of deal.

I’ve personally done this with success in the past.

It required my client to pay a portion of the outstanding payment and the collections agency agreed in exchange to remove the late payment from the credit report.

This can be a very risky approach for a couple of reasons.

First, you need to have all of these things in writing because it’s possible a shady collections company could take your money and simply not remove the late payment.

Second, there are a lot of people out there who will happily take your money in order to improve your credit report but they may not always have the expertise or the skills to get late payments removed.

Others might even resort to somewhat unethical tactics to get the late payments removed.

So I would be very cautious about paying anyone who is promising that your late payments will get taken off your credit report.

Utilization

The easiest way to increase your credit score by a substantial amount is to reduce your utilization.

Credit card utilization is also called your credit to debt ratio and it looks like at how much of your current credit lines you are currently using.

So for example if you have $10,000 in total available credit and you are using $3,000 of that, your utilization is 30%.

This factor makes up 30% of your credit score so if it is the main factor holding you back, simply paying down your credit cards can be the only step necessary to see a huge boost in your score.

Typically, I recommend getting your utilization down to somewhere around 5% if possible although just getting it to 30% can do wonders for some people.

You don’t want it to hit 0% because in the eyes of lenders you look like someone who does not use their credit which means you may not be as experienced in managing it.

So if you are trying to optimize your credit score try to keep your utilization around 1% to 5% by paying your bill off at the right time.

A fast and easy method for increasing your utilization is to get added as an authorized user to someone else’s account.

If that other individual is responsible and you can trust them to not miss a payment, and they have a high credit limit, your credit score can benefit a lot from them.

Another solution is to do a balance transfer to a business credit card that does not report to your personal credit report.

This will allow your credit card balance to essentially disappear, thus boosting your utilization instantly.

Related: How to Improve Your Credit Score Fast

Credit history

Another way that getting added as an authorized user can help boost your credit score is to lengthen your credit history.

If you only have very limited credit history such as one credit card that has been open for six months, you could get added to an established credit card that has been around for years or even decades.

This would help dramatically increase your credit history but there are some caveats.

First, credit history is only 15% of your credit score so it is not a super influential factor. Payment history and utilization are far more important.

Also, the most important factor for credit history is the age of your oldest account so if your oldest account is very young there is only so much you will be able to do.

You could still go the authorized user route in that case but credit models have ways to decrease the benefit to authorized users, so the benefits you gain from getting added as an authorized user will hit a ceiling at some point.

Related: Does Closing Your Credit Card Hurt Your Credit Score?

New credit

The new credit category makes up 10% of your score, and it looks at two major things: recent inquiries and new accounts opened.

Typically, a hard inquiry will only drop a credit score around three to five points. But if you have a lower credit score, that drop could be much more significant.

This is especially true if you have multiple hard inquiries.

So it is paramount that if you are trying to increase your credit score, you need to avoid applying for a lot of credit because those inquiries could do a number on your score.

The other factor is new accounts opened. You’ll want to limit the number of new accounts if you are trying to bump your score up by 200 points.

One thing to note is that in some cases you will need to open up new accounts in order to begin establishing your credit history and building up your credit profile.

So if you are trying to increase your score by 200 points in the long run, then applying and opening accounts makes sense and you will just have to deal with the temporary drop knowing that it’ll pay off in the long run.

Related: Why Did My Credit Score Go Down After Opening Up A Credit Card?

Credit mix

Credit mix looks at how diverse your different credit lines are. There are two major types of credit lines: installment and revolving credit lines.

To optimize this category, you would want to have a mixture of something like credit cards and installment loans which include auto loans or home loans.

There are a couple of considerations to think about with this category though.

First, this only makes up 10% of your credit score and is considered the least important factor. Often, the only people who truly care about this factor are those striving for something like a perfect credit score.

Second, the consequences of obtaining some of these loans are pretty high because they typically are higher amounts that require more long-term obligations.

So you definitely don’t want to go rushing into obtaining loans just to benefit your mixed credit.

For those reasons, I would make mixed credit the lowest priority when trying to bolster your score a couple of hundred points.

FAQs

Is it possible to increase your credit score by 200 points?

It is possible to quickly increase your credit score by 200 points but it is not easy and you may have to rely on a little bit of luck. For most people, increasing their score by 200 points is a more medium to long-term goal.

Should I pay someone to get late payments removed?

Getting late payments removed from your credit report can be extremely difficult and so you should be cautious about paying anybody who makes promises about removing late payments. With that said, it can be done.

What is the easiest way to improve my credit score?

If utilization is holding back your score, then paying down your credit card debt is the easiest way to increase your score.

Final word

Improving your credit score by 200 points is usually a medium term to long-term goal depending on the steps you take and the factors that need to be addressed.

However, in some cases you might be able to increase your credit score by 200 points in just a month or two like I did. It might require a little bit of luck and a lot of research but it can be done.

Chase Bank Wire Transfers: (How to Send, Fees, Routing Numbers) [2021]

If you’re traveling or living aboard you might need to initiate a Chase wire transfer at some point.

But how much will the fees be and how do the wire transfers work?

This article will show you how these wire transfers work (step-by-step) and what kind of transfer fees you can expect to pay for both domestic and international wire transfers. 

I’ll also show you how to locate all of the important account numbers like routing numbers, SWIFT numbers, ABA numbers, etc.

Interested in finding out the top travel credit cards for this month? Click here to check them out!

Chase Bank wire transfer fees

The wire transfer fees charged depend on whether you are sending or receiving wires and whether your wire transfer is domestic or international.

Tip: Use the free app WalletFlo to help you travel the world for free by finding the best travel credit cards and promotions!

Chase domestic wire transfer fees

  • Incoming (receiving) wires: $15
  • Outgoing wires (online): $25
  • Outgoing wires (in-branch): $35

Chase international wire transfer fees

  • Incoming (receiving) wires: $15
  • Outgoing wires (online): $40
  • Outgoing wires (in-branch): $45/$50

Note that wire fees do change from time to time so always check for the most updated fees before processing your wire transfer.

If you are sending an online wire transfer to a bank outside the U.S. in foreign currency (FX), there will be no Chase wire fee for amounts equal to $5,000 USD or more or only a $5 Chase wire fee when less than $5,000 USD.

You should also note that some premium Chase accounts allow for free wire transfers.

For example, with Chase Private Client, you’ll have no Chase fee for all domestic and foreign wire transfers, incoming or outgoing, completed at any Chase branch, chase.com, via telephone or email.

Read more about Chase Private Client here.

Chase wire transfer limit

The total daily limit on wire transactions with Chase is $100,000 or your available balance.

Business customers can request a higher limit.

Chase wire transfer processing time

The amount of time it takes for a Chase wire transfer to go through and process depends on if you are sending them domestically or internationally.

Domestic wire transfers

For domestic wire transfers you can expect them to take about 1-2 business days for the funds to be received.

International wire transfers

For international wire transfers you can expect them to take 3-5 business days to be received.

Notice that there is a cut-off time at 4pm EST for sending Chase wire transfers.

How to do a Chase bank wire transfer (instructions)

First, make sure that you are enrolled in Chase wire transfers. 

Before you can begin making Wire Transfers, you must first add a wire recipient – the person or entity to which you will transfer funds.

How to add a recipient

Log-in to your Chase account and from the “Send Payments” tab, select the Wire Transfer option.

Click “Add a Wire Recipient.”

Enter information about your recipient, including:

  • The recipient’s name
  • A nickname for your recipient
  • Your recipient’s mailing address, including country
  • A message to your recipient

Next, you’ll need to enter the bank routing number (ABA or SWIFT code) for your recipient’s bank.

What is a SWIFT Code?

A SWIFT code is an international bank code that identifies particular banks worldwide and is also known as a Bank Identifier Code (BIC). A SWIFT code will have 8 to 11 characters.

Other terms used by international banks include:

  • CHIPS (Clearing House Inter-Bank Payment System) – US and Canada only
  • NCC (National Clearing Code)
  • BSC (Bank Sort Code)
  • IFSC (Indian Financial System Code).

What is an ABA number?

An ABA (American Bank Association) routing number is a 9-digit numeric code used to identify financial institutions in the United States.

If you do not know the recipient’s SWIFT code or ABA bank routing number, use the following links to search for them:

(Click here for a guide to using these links.)

Once you input that account number information, the routing number you enter will be displayed on the next page, along with the name of the recipient’s bank.

You’ll then be able to enter additional information about your recipient’s bank, including:

  • The bank’s mailing address
  • Your recipient’s bank account number
  • A message to your recipient’s bank — (This is usually additional transaction-related information that the originator would like to provide the recipient’s bank. For example, this could be used to tell that bank additional information about the recipient, such as the official name of the recipient. These instructions will not affect how we process your request.)
  • You can also choose to add an intermediary bank at this time — (This is the bank that funds go through to get to the intended recipient. Most often used when the originating bank does not have a direct relationship with receiving bank.)

IBANs (International Bank Account Numbers)

Note that the SWIFT code is used to identify a specific bank for your international transaction, but you’ll still need to identify an individual bank account for your international transaction

That’s when you use IBAN numbers.

IBANs (International Bank Account Numbers) are a series of up to 34 alphanumeric characters that uniquely identifies a customer’s account held anywhere in the world.

The IBAN consists of a two-character country code, followed by two check digits, and up to 31 alphanumeric characters for the bank account number.

The account number must be in IBAN format for the following countries:

  • Austria
  • Belgium
  • Bulgaria
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Poland
  • Portugal
  • Romania
  • Slovak Republic
  • Slovenia
  • Spain
  • Sweden
  • Turkey
  • United Kingdom
  • Iceland
  • Liechtenstein
  • Norway

After you’ve input all of that information, be sure to review it.

If you need to make changes, click “Change.”

Once all information is correct, click “Add Recipient” and you should receive a message confirming that your recipient has been added.

How to send a Chase wire

To make a one-time wire transfer in U.S. Dollars, click on the “Send Payments” tab, select “Wire Transfer” and click “Schedule Wire.”

Select the account from which the funds will be transfered. Then select your wire recipient by clicking the radio button next to the recipient’s name.

Click “Next” to continue.

Enter information about your Wire Transfer, including:

  • The amount of the Wire Transfer
  • The date on which the Wire Transfer will be sent (the wire transfer can be scheduled for up to one year in the future)
  • A message to the Wire Transfer Recipient (this is usually additional transaction-related information that the originator would like to provide the receiver. For example, this field is often used to communicate invoice information or for further credit to information.)
  • Instructions for the recipient’s bank
  • Memo information — (this is a field that allows you to provide information about the wire transfer for your own personal records.)

Then click “Next” to continue.

Once all information is correct, click “Wire Money in U.S. Dollars” and you should receive a message confirming that your Wire Transfer has been scheduled.

You can do wire transfer in foreign currencies but keep in mind that wire transfers sent to international recipients cannot be future dated or repeating.

Note: All foreign exchange prices are provided by The J.P. Morgan Investment Bank Foreign Exchange Group.

For more detailed instructions from Chase, click here.

Tip: Use the free app WalletFlo to help you travel the world for free by finding the best travel credit cards and promotions!

What countries can I wire funds to?

You will be able to send money via wire in more than 35 currencies worldwide.

However, you will not be able to transfer money to the following countries due to US sanctions:

  • Afghanistan
  • Belarus
  • Iran
  • Iraq
  • Lebanon
  • Liberia
  • Libya
  • Myanmar
  • Sierra Leone
  • Syria

Chase wire transfer help

Sometimes you just need to speak to someone to help sort things out, especially when there’s a lot of funds passing through.

If you have any questions or need help when scheduling a Wire Transfer, you can call Chase at: (877)242-7372

You can also call the Chase Commercial Online Service Center phone number at: (877) 226-0071

Government, Not-for-Profit, and Healthcare Banking Clients can call the help phone number at: (855) 893-2223).

What is the Chase Bank wire transfer routing number?

If you have a Chase check you can find your routing number on your checks as shown by the below image.

If you don’t have your checks and you need to find your Chase routing number, know that the routing numbers are different for each state.

Here’s a list of them by state/region:

Arizona122100024
California322271627
Colorado102001017
Connecticut021100361
Florida267084131
Georgia061092387
Idaho123271978
Illinois071000013
Indiana074000010
Kentucky083000137
Louisiana065400137
Michigan072000326
Nevada322271627
New Jersey021202337
New York – Downstate021000021
New York – Upstate022300173
Ohio044000037
Oklahoma103000648
Oregon325070760
Texas111000614
Utah124001545
Washington325070760
West Virginia051900366
Wisconsin075000019

Chase international wire SWIFT Code

The SWIFT (or BIC Code) for Chase Bank is CHASUS33

Thank bank’s address is: Chase Bank, 270 Park Avenue, New York, NY 10017, USA

Chase travel notifications

Are you going to be spending time abroad soon?

Before you embark on your international travels, you’ll want to be sure to put travel notifications on your credit cards and Chase bank accounts.

It’s a pretty simple process and you can do it online or even via the Chase app.

Doing so can save you a lot of headache, and I’d highly consider putting in your travel notices.

Chase foreign transaction fees

If you’re going to be traveling abroad and doing some spending, you might want to consider going with a Chase card that offers no foreign transaction fees.

I’d recommend looking into cards like the Chase Sapphire Preferred and the Chase Sapphire Reserve. The Sapphire Reserve earns 3X on dining and travel purchases, so you’ll be earning a lot of points in the process your travels. It also has a $300 travel credit and Priority Pass membership that will get you into airport lounges all around the world.

To read more about the Sapphire Reserve benefits, click here.

Chase wire transfer FAQs

What is the Chase wire transfer limit?

The total daily limit on wire transactions with Chase is $100,000 or your available balance. Some business customers may request higher limits.

How long does it take to process a Chase wire transfer?

A domestic wire transfer will usually take 1 to 2 business days but an international wire transfer may take up to 3 to 5 business days.

There is a cut-off time at 4pm EST for sending Chase wire transfers.

What is the Chase international wire SWIFT Code?

The SWIFT (or BIC Code) for Chase Bank is CHASUS33
Thank bank’s address is: Chase Bank, 270 Park Avenue, New York, NY 10017, USA

What are IBANs?

IBANs stand for “International Bank Account Numbers” and are a series of up to 34 alphanumeric characters that uniquely identifies a customer’s account held anywhere in the world.

The IBAN consists of a two-character country code, followed by two check digits, and up to 31 alphanumeric characters.

What is the Chase Bank wire transfer routing number?

You can find Chase routing numbers here.

Can you get the wire fee waived?

You may be able to avoid the wire fee if you are wiring an amount of $5,000 or more to a bank outside the U.S. in foreign currency.

Final word

Setting up a wire transfer with Chase is pretty easy to do. Whether you’re doing it online, over the phone, or in-branch, it shouldn’t be a major problem and this article should show you what kind of fees and waiting times to expect.

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