How a Goodwill Letter Can Save Your Credit Score


Financial mistakes can cause hefty damage to your credit score. If you pay your credit card bill more than 30 days late, for example, your score can tumble by 100 points. If you have a foreclosure on your home, your score can fall by 150 points or more, depending on how long ago your lender filed for foreclosure. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

These mistakes stay on your three credit reports — one each maintained by Experian, Equifax, and TransUnion — for seven to 10 years.

There may be some hope of removing those financial mistakes sooner, however. Consumers have had some success requesting that banks, lenders, and other creditors remove their late or missed payments from their credit reports early by writing what is known as a goodwill letter — letters sent to creditors outlining the reasons for their missed payments, explaining why they'll never miss a payment again, and requesting that these creditors remove the financial mistake from their credit reports.

These letters offer no guarantee of success. Some creditors will simply respond that they are legally required to report the financial mistake for the set period of time. Others won't respond at all.

But if there's even a slim chance that a goodwill letter will work, why not try it?

When goodwill letters do the most good

The most common financial mistake that ends up on credit reports — and the one that goodwill letters have the best chance of erasing — are late payments. It's important to realize, though, that late payments are only officially late for credit purposes when they are more than 30 days past due.

Missed payments stay on your credit reports for seven years. How much these payments lower your FICO score varies depending on how high your score was to begin with and several other factors. But you can expect an immediate drop of about 100 points — a big hit, to be sure.

As time passes and your late or missed payment gets older, the impact it has on your score will lessen. But it will remain on your reports for lenders to see until seven years has passed. That's where a goodwill letter comes in.

What a goodwill letter should say

A goodwill letter should say why you missed a payment. Maybe you lost your job. Maybe you were hit with a serious illness or injury. Maybe you were embroiled in a long divorce or legal battle. Whatever the reason, explain it clearly in your goodwill letter.

The letter should also state that you won't pay late or miss a payment again. Your letter will work better if you don't have any other missed or late payments in your history, or additional financial blemishes on your report. Creditors probably will ignore it if your credit reports are filled with missed payments.

Finally, close your letter with a request that the creditor remove your one financial mistake from your reports.

There is a good chance that creditors will respond in the negative, if they even respond at all. Some creditors prefer to follow that seven-year guideline. But if you're lucky, and your case is strong enough, a well-written goodwill letter might work.

When you're ready to send one, mail it to the address listed on your creditor's paperwork.

A goodwill letter example

Here is an example of a goodwill letter that could potentially help you in removing a missed credit card payment from your credit reports:

(Your name)
(Your address)
(Your credit card account number)


To Whom It May Concern:

I hope you are well. I'm writing because after checking my credit reports, I discovered that you have reported a late payment on (date) for my account, number (list your account number here), to the credit bureaus. I am writing today to request that you remove this late payment from my reports.

As you can see from my past financial history, I pay my bills on time and manage my credit well. This late payment was a one-time event, the result of a short-term job loss. (Insert whatever actually caused you to miss your payment here.) Because this is an isolated incident, and because my financial challenges are behind me, I would appreciate this help on your part.

My history of on-time payments since this late payment is proof that I take my financial obligations seriously. Please consider this history in making your decision.

If you have any questions, or if you would like to speak with me in more detail, please call me at (your phone number here) or send me an email at (your email address here).

Thank you for your time, and I look forward to hearing from you.

(Your name here)

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