Goodwill Letters in Credit Repair

“…Once a delinquency has been reported to a collection agency, paying it off won’t help your FICO score. The damage has already been done, and the blemish will remain on your credit report for seven years,” said financial guru Suze Orman.

While this is widely accepted conventional wisdom, a bad credit report is not established in stone. There is hope to repair it, because the wise consumer has an important tool he or she should always try when seeking to repair a credit score damaged by late payments on car notes, mortgages or student loans—that is the goodwill letter.

What is a Goodwill Letter?

A goodwill letter ( a person’s written request to contact a creditor that has reported his/her late payment to the credit reporting agency. In the letter the person asks the creditor to remove the late payment report or make an adjustment to his report.

Important Ingredients of a Goodwill letter

  • An old-fashioned letter—Only hoping for a better credit score is unfruitful. The creditor needs to take more action and write the goodwill letter. The request should be sent through regular postal service and not by email. Though emails are popular and easy, an actual letter conveys a serious attitude. It is good to keep a copy of the letters sent to credit agencies to have a record of the contact.
  • Sent to the right person—Many times it is easy just to send the goodwill letter to the general business address, but the wise person will click on the creditor’s website to find the name and address of the CEO of the company or other high-level manager to whom the letter should be sent. Once this is found, he/she can send the letter to the person with authority to act. Having the right person is the key to success often.
  • An explanation for the late payment—The letter should clearly identify the date of the missed payment, the date it was due, and the account number of the bill. Within the letter the writer should give the specific reason for the error in payment such as the loss of a job, a medical emergency, or marital/family relationship issues. Explain the situation honestly without excusing or justifying the lateness, acknowledging continued responsibility for the debt and that the creditor’s records are accurate. It is important to not dispute the debt in a goodwill letter. Anticipate any questions the creditor might have and answer them in the letter.
  • Be honest—Simply tell the truth. The writer should let the creditor see his/her integrity. A goodwill letter should be reserved for only honest situations.
  • A reassurance of the commitment to pay the debt—While explaining the circumstances that led to the late payment, the letter should also include a strong reassurance to the creditor that the person is committed to paying off this debt and will be timely in payments in the future. It should acknowledge the creditor’s rightful financial terms concerning the debt. Express to the creditor that this concern is the last instance of such and will not the normal policy of the consumer’s finance future. The letter needs to give lenders reason to believe that the consumer is still a good credit risk. The goodwill letter also should reassure the lender that the debtor will not stop making payments in the future, but is still willing to pay the debt
    Try –It is easy to start to despair, become negative and not try to improve one’s credit rating, but a goodwill letter can help in all times of loans—private, federal and even with a student loan. Being positive is important in the process.
  • Try again and again—Never take “no” as the final answer. If the first goodwill letter does not produce success in a positive response, the consumer should send another and another until the credit agency responds. Sometimes the letter not sent might be the one the bureau would have finally accepted. It is even possible to call the creditors on the phone line after the letter is sent to ask “Did you receive my letter?” Long endurance and several days sometimes are needed for successful credit repair.
  • An example of change—The consumer should also include related examples of bills that he/she has paid on time to prove to the creditor the late payment was only a one-time occurrence, and that the consumer has since improved in his/her personal finance.
  • Apply politeness—The consumer should be respectful and courteous in tone in the letter. The person needs to remember that he/she is legally obligated to repay the debt on time, and that the creditor is justified in reporting the poor payment habits. The consumer is asking for a favor when writing a goodwill letter, so his/her tone cannot sound demanding. He should have an attitude that expresses “I am asking please” and not “I demand my rights.” When seeking to repair his credit, truly he is appealing to a credit agency’s goodwill. Be sure to thank the creditor for his/her willingness to consider the request.
  • Search for a sample—There are several different templates of sample goodwill letters available for free on the internet. These can serve as good samples for those consumers requesting a goodwill adjustment.
  • Send a thank you—Following the lender agreeing to have the late report removed, be sure to send a thank you note.
  • A clear request—The writer should be sure to clearly ask for the creditor to remove the negative information from the credit report. The old saying is true, “We have not, because we ask not.” Make sure to ask clearly.
  • Appeal for compassion—Creditors are people who have also made mistakes, likely the very ones the writer has made. So, a goodwill letter should include an appeal to the creditor for compassion over the out-of-the-ordinary mistake the person has made in missing one payment.

Why is a Goodwill Letter needed?

Working to fix past credit problems is worth it. There are several reasons to write a goodwill letter if to improve a tarnished credit score. First, it is free. However, it does require some effort to search out the best person to send it to in the creditor’s financial department. The letter needs to be addressed to a particular manager or supervisor, above the level of a general customer service representative, because the low level worker will not have the authority to act on the letter and may dismiss the request without forwarding it to upper management. Yet, the letter requires only a small amount of time to write and the cost of postage to send a goodwill letter makes it a real bargain if effective.

Second, taking the time for the removing of negative information can directly have a big impact on a person’s financial future. A person’s credit score can often determine whether he/she is approved for a loan. It can also determine how good an interest rate he/she can get for the loan. As regards the higher a person’s credit score, the higher the score, the better the interest rate on the loan. For instance, regarding the life of a home mortgage, a small difference in credit score can translate into much money where there is just one point difference in the score. As The Fiscal Times writer Beth Braverman reports, “At today’s rates, for example, the total interest owed on a $300,000 mortgage would cost an extra $14,000 for an individual with a credit score of 759 rather than 760, according to”

Third, it can be effective. As Dana, a member of the MyFICO forum posted about her Capital One account, “i sent the letter a few weeks ago and got a reply in the mail yesterday…. and they deleted the account from all 3 credit bureaus!”

A Sample Goodwill Letter

A goodwill letter could read something like the following:

Dear sir,
I found your address on your internet site and I am writing this letter to request that you remove late payments provided by your agency to the national credit bureaus. The removal of these reports would greatly help my attempts to qualify for a mortgage at my local bank. I know I have made a mistake in making the late payment to your company, and I have received your warning letters. The reason for my late payment was __________________________. I learned of the damage to my credit score when I made my annual check of it. I no longer have the issue that caused my previous late payment, and I am going to make all future payments in a timely manner. I am requesting a favor of you in this removal request. Your agency and its negative report is the only thing standing in the way of my mortgage application’s approval. I have read the story of other customers of your agency on internet forums listed below that put this letter in my mind. I have improved my payment history to several other creditors and have secured a good reputation with them. I forward these companies to you as financial references. If you could respond to me in 30 days and post a positive report on my file at the credit bureau, this would improve my credit rating improving my chance for a mortgage at good interest rates. I know I have caused my own financial problems, but I hope that as my original creditor, you will stay my financial execution and give me another chance. I no longer charge things on my credit cards and I plan to continue to rectify my past mistakes with every organization I owe money to. Thank you for being fair with me in the past, and your gentle method of collections. I do hope my plea works for a positive change in my credit report. Thank You.

“Statistically, 100 percent of the shots you don’t take, don’t go in,” said the great hockey player Wayne Gretzky. This is certainly true when considering a goodwill letters. Anything positive may improve a damaged credit score. The only way to fail to score the point with a goodwill letter is to not take the shot!