Have you checked your credit report and realized one late or missed payment is having a major impact on your score? Writing a goodwill letter to a creditor could possibly erase that blemish on an otherwise spotless credit score.
What is a goodwill letter?
So, you might be asking yourself, what is a goodwill letter? A goodwill letter is not an official tactic and is not widely publicized. Essentially, it is a letter that is a written correspondence to creditors to request they remove negative marks on your credit report. Reaching out personally to a collection agency or creditor might seem like a long shot, but dings on your credit report for missed or late payments can negatively impact you for years. Accounts in collections and late payments stay on credit reports for seven years, and during that time you may find it more difficult to get approved for new loans or lines of credit.
Goodwill letters should be written by borrowers who have an otherwise good credit score and a good track record when it comes to making payments. If creditors find you have a history of repeatedly missing payments or other negative marks, they probably are not going to be lenient and help you. If your credit history shows you are typically in good standing, goodwill letters can help address missed payments that happened during emergencies or due to technical issues. Unforeseen events and emergencies happen whether we want them to or not, and often those circumstances lead to financial hardships. If a personal emergency impeded your ability to make on-time payments, a creditor or collection agency may choose to ask credit bureaus to remove the negative item. While this is never a guarantee, a little bit of time and effort may be worth thousands in the long run.
It is important to note that writing a goodwill letter is different from disputing an error. In a goodwill letter, you are writing directly to the original creditor or collection agency and asking for forgiveness. You are not directly reaching out to any of the three credit bureaus - Equifax, Experian, or TransUnion – and it is not to be used for disputing errors. This is exclusively for trying to expunge a blemish on an otherwise clean credit history.
How to Write One
If it sounds like a goodwill letter might be able to help you, you are probably wondering how to write one. Goodwill letters are professional, business-related correspondences. They should be clear and concise and should explain the reasons for the lapsed payment and what you have done to prevent this from happening again. You should generally include:
- Your identifying information such as your account number and address
- The creditor’s name and address
- The date of the missed or late payments
- A brief explanation of why you missed the payment taking full responsibility
- A list of steps you have taken to improve your creditworthiness such as enabling autopay
- The reason you are requesting the goodwill adjustment
- A direct request to have the negative mark removed
When writing your goodwill letter keep in mind your goal should be to prove the missed or late payment was a temporary lapse and that you are committed to continuing a strong credit record in the future.
You can find an example of a sample goodwill letter template here: TDECU Goodwill Letter Template
What to Expect
Goodwill letters are a great, little-known option for getting negative marks removed from credit reports. However, as a disclaimer, there is no guarantee it will work. Lenders are not obliged to remove negative marks. You may end up not hearing back at all, or you might be outright rejected. A creditor might also make the adjustment and not even tell you, so be sure to check your reports regularly. If it has been over a month since sending the letter, do not be afraid to be persistent and follow up. Goodwill letters are a relatively simple step and a worthwhile effort you can take to help ensure you maintain good credit, which is an important aspect of managing healthy personal finances. If you have other questions about taking control of your credit, one of our expert TDECU Wealth Advisors can help.