Picture this. You have pulled out your credit report and figured out that it records a late or missed payment. Doesn’t seem a big deal, right?
Believe us when we say a late payment can stay on your credit reports for 7 years, impacting your credit health hugely and making it incredibly challenging to get approved for financing. Among the five crucial aspects that determine the FICO credit scores, nothing plays a greater role than the history of payment. This accounts for approximately 35% of your credit score. Irrespective of why you were late- due to a mishap or an unfortunate health situation, a single incident of late or missed payment can lead your credit scores to drop considerably.
Enters the solution- a goodwill letter! The letter requests the creditor for their understanding and compassion. It promises the creditor you will do a better job with your finances in the future. While the creditor doesn’t necessarily have to keep your request, they may still show some mercy, asking the bureaus to weed off the ding that will lead to improved credit scores.
Curious to know more? Today’s comprehensive post will help you take a closer look at goodwill letters, how they work, what to incorporate, and whether they can truly erase that one blemish on an otherwise stellar credit score report.
Let’s dive right in!
Goodwill Letter: A Brief Overview
As per the best minds associated with finance study help services, a goodwill letter implies a general request made to a creditor to remove the derogatory mark from your credit reports. Personally, reaching out to a creditor or collection agency may seem like a long shot; however, dings on your credit report for late or missed payments can impact you negatively for years. You may find it more challenging to get approval for lines of credit or new loans at this time.
Essentially, goodwill letters must be written by borrowers who have an otherwise stellar track record and brilliant credit score in case of making payments. Creditors may not be lenient and willing to aid you if they find you have a long history of repeatedly missing payments or other negative remarks. However, if your credit score demonstrates you are in good standing, goodwill letters can help address missed payments due to technical issues or emergencies.
It is wise to remember that goodwill letters aren’t an official technique. They are never actively publicised as a viable choice by the credit bureaus, the Federal Trade Commission or the Consumer Financial Protection Bureau. As a matter of fact, the FTC strongly asserts that in the scenarios of negative marks, only time can make them go away.
Further, countless anecdotes in reputed forums indicate that sometime goodwill letters work- but since it’s not a legal or official complaint procedure, creditors do not need to respond to you or consider your request.
When Should You Consider Writing A Goodwill Letter?
According to Rod Griffin, the director of consumer education and engagement at credit bureau Experian, if an individual has a history of missed payments or other crucial risk factors like high credit card balances, there are fewer chances of the creditor granting your goodwill wish. The request will also be less effective if one doesn’t have a good excuse for the misstep, like if you merely forgot to make the payment.
However, according to Rod Griffin, there are certain situations where a lender might agree to withdraw the late payment. For instance, the lender may agree if a consumer instantly catches on the missed payment, never had any delinquency in the past, and asks it to be removed from the credit report.
Similarly, if you happen to have a stellar record of overall strong credit history and on-time payments, here are certain below-enlisted instances when you should consider sending a goodwill letter-
- Due to financial hardship, like divorce or the loss of a job, you miss a payment.
- Due to a medical crisis that put you or your loved ones in the hospital, you missed a payment.
- Due to a technical glitch, like the autopay not working correctly, the payment didn’t go through.
- You didn’t receive your bill since you moved to a new address.
Goodwill Letter: How to Write An Effective One?
Before you plunge deep into writing a goodwill letter, it is essential to remember that these letters are simply professional and business-related correspondences. Thus, it is crucial to write a clear and concise one that should describe the reasons for the lapsed payment and the steps you have taken to prevent this from occurring again.
A close look at resume builder websites will help you understand that there’s no formal format for a goodwill letter. However, the below-mentioned guidelines are generally considered effective-
- It offers an apology and is sincere.
- It expresses gratitude to the creator for the services they’ve offered you.
- It ensures you’ve incorporated the reason why you missed the payment
- It states your case as eloquently as possible
While writing a goodwill letter, remember it must generally incorporate the-
- Begin by mentioning your account number and the crucial details
- Try to add as a part of your salutation “To Whom It May Concern”
- Creditor’s name and address
- Date of late or missed payments
- A short yet clear description of why you missed the payment, taking complete responsibility
- A list of vital steps you’ve taken to enhance your creditworthiness, like enabling auto-pay
- The reason you’re requesting for the goodwill adjustment
- A direct request to remove the negative mark
- Bring up the credit history to demonstrate to them that by providing you with the goodwill adjustment opportunity, they aren’t risking it.
Tried-And-Tested Tips to Write A Flawless Goodwill Letter
Writing a remarkable goodwill letter requires tact and a well-thought plan. After all, you’re asking for a favour from someone who doesn’t necessarily have to grant it.
Have a look at the below-mentioned brilliant strategies to write a brilliant goodwill letter that will help you prove you are committed to maintaining a strong credit record in the future-
- Politeness and Appreciation Is The Key
Getting accusatory or becoming angry will take you nowhere. It will only lead your creditor to throw your letter in the trash. Rather, try to write conscientiously and gratefully to let your creditor know that you appreciate them taking the time to consider your request.
- Write Sweetly Yet Briefly
Ensure your letter is simple and to the point to captivate the creditor’s attention. Try to narrate your story in 3-4 paragraphs. Also, ask someone to proofread it before you turn it in.
- Describe How You Will Maintain Your Track Record With Payments
Always outline your plan to make on-time payments in the future. Like, if were unemployed for 5 months but have recently found a job, try to reassure them that you will make the payments soon.
- Take Complete Responsibility For The Mistakes You Made
Know accountability is the key to writing a successful goodwill letter. So, try to own up to your late payment and honestly describe why it happened. Always be specific. Write clearly whether you lost your job, were admitted to the hospital, or were saddled by sudden expenses. Do not ever make excuses, as that won’t get you anywhere.
- Mention The Positive History of Payment
The main objective is to gain the trust of the creditor. Try to prove that your financial hardship period was temporary to achieve that successfully. If you could show them that you made timely payments after or before that timespan, increasing chances are they will cut you a break.
- Incorporate Your Account Number and Contact Details
Note down the address, email id and phone number to make the job of your creditors relatively easy. If your credit report doesn’t include the full account number, you can find it on the paperwork for that account.
- Clearly Explain Why The Goodwill Adjustment Is Vital
Explain how the adjustment benefits you to make the creditor empathise with your condition. Describe clearly if you are applying for a mortgage, a small business loan, or whether you are attempting to qualify for a low APR on a credit card. Demonstrate that you’re taking control of the finances and you care about the credit. Bring a conclusion to this segment by reaffirming your loyalty to the company’s creditors.
An Inspiring Sample of a Goodwill Letter
For your assistance, we have provided a sample goodwill letter below. Feel free to make changes to this template to fit as per your unique scenario.
[First and Last Name]
[Name of the city and State ZIP code]
Name of the creditor/ ABC Collection Agency/ XYZ Credit Card Company
ABC Fake Street
XYZ City, ST 6789
Account Number- XYZ-3456789
Debt Amount: $2256.89
To Whom It May Concern:
I want to thank you for taking some time to go through the contents of this goodwill letter. The key objective is to address [ a missed payment (s)/late payment (s)] on my [name of the account] account. I came across a negative mark on my recent credit report, and I request you kindly remove it.
Previous to the recorded [missed payment (s) or late payment (s)], I had a stellar track record of making payments right on time. I know I need to make payments promptly on my [name of the account] account. And, I guarantee I will stay on top of these things from here on out. I missed a payment or made a late payment due to (scenarios that portray your negative change of circumstance or hardship). I promise from my side that this won’t happen again.
I am planning to apply for (a mortgage or a loan) and I came to the realisation that the missed credit card payment (s) on my payment history could hinder my capacity to qualify. Truly, I believe that my prior actions will in any way reflect my commitment and creditworthiness to repay the debts. Thus, it will be kind if you could grant me a second chance and remove the record of late payment.
Thank you for your consideration, and hope you’ll approve my request.
[First and Last Name]
A goodwill letter can truly remove a negative mark on your credit score. As long you’ve a viable reason for making a late payment and are in good standing, you can always request your creditors ‘forgiveness’. Creditors do not need to grant or consider your request, but given consumers’ success in the past, crafting a brilliant letter may still be worth a shot!
Anna Mayer is a freelance writer and avid blogger. A bibliophile and lover of various cuisines, she provides paper help services for a renowned website, MyAssignmenthelp.io. She also loves playing with her dogs.