Payment history plays a significant role in determining your credit score, accounting for 35% of the total score. A single late payment, which occurs 30 days or more after the due date, can have a notable impact on your credit rating.
Goodwill letters are formal requests sent to creditors or lenders, asking them to remove or adjust a late payment to prevent it from affecting your credit score. These letters typically provide an explanation for the late payment and are most effective when the late payment was a one-time occurrence and you have a good relationship with the lender.
Goodwill letters can be successful under certain conditions, such as a one-time mistake, extenuating circumstances like medical emergencies or job loss, technical issues, or a long history of good payment behavior. Smaller financial institutions may be more flexible compared to larger banks with stricter policies. However, there is no guarantee of receiving a goodwill exception.
To increase the likelihood of late payment forgiveness, follow these steps when writing a goodwill letter:
1. Gather your account details, including the late payment date and amount reported.
2. Explain the situation honestly, taking responsibility and offering solutions to prevent future late payments.
3. Politely request the removal of the late payment from your credit score, expressing gratitude and emphasizing how it would benefit your financial goals.
4. Provide supporting evidence, such as medical bills or proof of job loss, if applicable.
5. Proofread your letter before sending it to ensure clarity and professionalism.
Review your goodwill letter carefully. Utilize tools like Grammarly to check for grammar and syntax, and consider seeking feedback from a trusted friend or family member for review. Ensure that the letter is both clear and professional, expressing gratitude to the lender for their time. Once completed, you can send it via mail, email, or the company’s online portal. Some companies suggest sending the letter by certified mail for confirmation of receipt.
Goodwill Letter Template for Late Payment Removal:
Your goodwill letter should contain the following components:
– Your personal information: name, address, account number, phone number.
– Date of the goodwill letter.
– Professional greeting, e.g., “To whom it may concern.”
– Explicit request for a goodwill adjustment.
– Explanation of circumstances leading to the late payment.
– Acceptance of responsibility for the late payment.
– Positive aspects in your favor, like a longstanding relationship, high annual fee, or excellent credit history.
– Explanation of how the late payment could affect your financial objectives, such as a mortgage application.
– Confirmation that the account is current or paid in full.
– Polite request for goodwill.
– Thank you note for their time and consideration.
– Your signature.
Ensure the letter is concise, limited to one page, and strikes a balance between professionalism and sincerity.
Goodwill Letter Template:
Dear [Creditor’s Name],
I am writing to request a goodwill adjustment to remove a late payment noted on my account mentioned above. My credit report indicates that a payment was reported late on [specific date of late payment].
The delay in payment stemmed from [brief, honest explanation of circumstances]. I acknowledge my responsibility for making timely payments and apologize for the oversight. To prevent future occurrences, I have implemented measures such as [list of actions taken, e.g., setting up automatic payments, building an emergency fund, or enabling payment reminders].
Having been a loyal customer of [creditor’s name] since [year of account opening], I have maintained a positive payment history throughout our association. This late payment is an anomaly in an otherwise consistent record. Given my history and current account status, I kindly request a goodwill exception be granted for the removal of this late payment from my credit report. As I plan to apply for a mortgage soon for my first home purchase, this adjustment would greatly assist me.
Thank you for considering my request and for your time. I value our relationship and eagerly anticipate continued partnership in the future.
Warm regards,
[Your Signature]
[Your Printed Name]
In the event that your goodwill letter is denied, consider these strategies:
– Submit a revised request with more details.
– Reach out to customer service for a direct appeal, escalating to a supervisor if necessary.
– Request debt validation or verification to ensure the accuracy of the debt reporting.
If the strategies mentioned above do not result in the removal of the negative item from your credit score, you can shift your focus towards building a positive payment history. If a goodwill letter is unsuccessful, you may explore other options:
1. Wait for late payments to naturally fall off your credit report, which typically occurs after seven years.
2. Consider negotiating a pay-for-delete agreement, where the creditor agrees to remove the late payment from your credit report upon receiving full payment.
3. Develop positive credit habits such as making timely payments on all accounts, maintaining low debt utilization, and diversifying your credit mix to enhance your overall credit profile.
For more guidance on improving your credit score, please refer to our resources here. This article was originally published on GOBankingRates.com under the title: “Writing a Goodwill Letter: How to Request Forgiveness for Late Payments.”
