Do you have late payments, or other derogatory information on your credit report(s)? If you’re applying for a mortgage, or other loan, you may find that a these negative tradelines are preventing you from obtaining the best interest rates.
When all other efforts fail (How to Clean Up Your Credit Report), try using a letter of “goodwill” to have the derogatory account information removed from your credit file.
Here’s how it works:
Credit card companies, banks, and other lending institutions have an interest in keeping their customer satisfaction levels high. Often times consumers will miss a payment deadline by a few days or longer due to forgetfulness, carelessness, or even an exceptional life event. If the late payment is legit, the last remaining option (besides waiting 7 years for the blemish to age off your report) is to simply ask the creditor to remove the late payment from your account as a courtesy of doing business. Often times (though not always) the creditor will remove the blemish as a gesture of “goodwill” (hence the term “goodwill letter”).
Key Elements of a Successful Goodwill Letter:
When writing a goodwill letter to a creditor there are several elements that you want to cover to improve the letter’s chance of success.
1. Keep the tone of the letter friendly and respectful.
2. Thank the company for the service they provided you.
3. Take responsibility for the late payment(s).
4. Define the chaotic life event (or other reason) that caused you to miss the scheduled payment.
5. Explain why it is important for you to have your account amended (an example might be you are preparing to apply for a mortgage or other loan).
6. Thank them for taking the time to read your letter.
7. Remember to keep the tone of the letter friendly.
Example Goodwill Letter:
Here is an excellent example of a goodwill letter I created that you can use and modify to suit your particular needs.
Your Name
Your Address
Date
Company’s Name
Company’s Address
Regarding Account # XXXXXXX
To Whom It May Concern:
My purpose for writing this letter today is twofold; one is to thank Toyota Financial Services for the excellent service you have provided me over the last few years and the second is a humble request to have my account information amended with regards to a late payment occurring in May of 2006.
I bought my new Toyota in the fall of 2003 and couldn’t be happier with my decision. Was it not for (describe some crazy situation that distracted you from making your payment on time: a move, a medical emergency, an accident, lost check, etc.) I’d have a spotless payment history. I understand my obligations with Toyota and have worked diligently to amend my relationship with you since that time (mention here how you’ve paid on time since the last late payment).
Since then I believe I have learned the essential organizational and financial management principles I desperately needed. Thankfully, responsible credit management is now reflected in my credit records which, excluding the Toyota 30-day late payment, are excellent. I wish to thank you for renewing your confidence in me and for giving me a second chance at a relationship with you, one that I am determined to keep spotless into the future.
Recently, I have begun my quest for a mortgage, and it has come to my attention that my tradeline with Toyota may affect my chances of obtaining the very lowest interest rates now available. Since the late payment(s) of record do not reflect my current status with Toyota, I am requesting that you give me a second chance at a positive credit rating by revising the late payment(s). I sincerely hope Toyota Financial Services believes in their customers, and I humbly request your consideration. I appreciate your time and look forward to receiving a favorable decision from you department soon.
Regards,
Your Name Here
Related Articles:
How to Clean Up Your Credit Reports
Dave Ramsey’s 7 Financial Baby Steps
How to Use a Goodwill Letter to Remove Late Payments From Your Credit Report
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Identity Theft Prevention Guide
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Great article and a good approach. Added this article in my weekly roundup!
(Sorry forgot to include my details)
Great article and a good approach. Added this article in my weekly roundup!
I’m wondering if this would work for me. I monitor my credit report and got notice that my report changed. Lo and behold, my wife and I forgot to make a payment on a credit card. Other than this blemish, the report is spotless. This was with Nebraska Furniture Mart, by the way. I’ve had this card for 3 years.
I just used this letter as a template and Capital One immediately removed my late payment. My credit score just shot up. VERY pleased, thanks for the tip.
For a cheap way to complete removal of inquiries I suggest RemoveMyCreditInquiries.org. They are a non profit group that charges $15 to remove credit report inquiries. They also remove derogatory comments too. Same price.
The article doesn’t specifically mention this: This probably works best for one-time (maybe two-time) late payments that were no more than 30 days (or maybe 60 days). If you have 4 or 5 late payments, it’s not as easy to win the sympathy vote. Also, if you’re 90 days late, that would also be harder to forgive.
This is something that I ought to try. All of my payments have been one time except for one situation where I simply forgot. While it doesn’t seem like a biggie, that one little thing may cause my score of 711 to rise above 720, the magic number.
Jeez, Have our credit scores really become so important that we need to go to this much trouble to remove one missed payment?
Yes, they sure have…I’m currently trying to get my family moved out of the city but I can’t qualify for a mortgage due to a series of late payments last year. These late payments make no sense to me…I have two small credit cards with payments at the same time each month, and one was paid while one wasn’t. Anyways, my credit repair specialist has sent out one goodwill letter to Capital One 40 days ago and is drafting the follow up letter as we speak. This is literally the ONLY thing holding me back from getting my family moved to the country. So unfortunately, yes, it is really that important.
I just went through a debt management plan and had not had any late payments before. As part of the process many of the creditors agreed to leave off late payments out of good will but all are showing that I am on the debt management plan.
Great post, the sample letter is priceless.
Ed,
It really isn’t that much trouble, I’ve already done the majority of the work for you! However, as many readers have already suggested, it really is that important!!
Having a better credit score can literally save you tens of thousands of dollars over the course of a home mortgage loan. It may also affect your chances of getting a job or promotion at work! Additionally, your insurance rates can be greatly affected by your credit score as well!
Great article! Thank you. I am going to try this. I have never been late on any payments. And due to not have fulltime work for 10 months (I worked temp. jobs, when they were available). I missed 1 car payment and it really killed my credit score! I’ll give an update if they help me out… Thanks again!
I have a Capital One credit card with a clear payment history for now over 3 years. But in the past – 5 years ago, there are late payments including a 90 day late payment. I spoke on the phone with a manager at Capital One who said that once reported they can not remove this and she had never heard of a good will letter. Do you have any advice?
The manager at Capital One most likely isn’t a manager at all! She was probably some other goon sitting in a cubicle next door.
Compose the letter as per my tips and send it to there collections department. If nothing else, its worth the shot!
THANKS!, I’m exactly in this situation and this letter gave me a hope. I’m finishing it and will send it ASAP.
Thanks again!
I am going through this with a mortgage company. I made an online payment over the Memorial Day weeked through the bank and it wasn’t posted by the mortgage company until the 7th. It is our only late payment. I have talked to four people so far and everyone has given me the standard “we don’t remove late payments as a courtesy” speech. Then when I ask for someone over them I get another supervisor. The thing is these are all “customer service” people. I think I will try this approach and send to the collections department.
I just have three late payment and two of them i have evidence it was paid on time. I will try your letter I think its work a try. I will let you know if it works.
Thank you
Seems the most important part is getting your letter to the RIGHT person, Iam in the same position. I missed one payment out of three years due to health reasons, Iam now permently and totally disabled due to this event which caused my one late payment. Although Iam blessed with lifetime VA disability, That one late payment has made getting a VA home loan tough. Iam gonna give it a try, Nothing to lose other then No.
Jim