Can a goodwill letter get late payments removed from your credit report?
Key takeaways
- A goodwill letter is a formal request to a creditor asking them to remove a negative mark, like a late payment, from your credit report.
- Goodwill letters are most effective when the late payment was an isolated incident caused by unforeseen circumstances, such as a financial hardship or medical emergency.
- Lenders do not have to respond to a goodwill letter, and many large lenders and credit card issuers have policies against doing so.
A late payment on a credit card or loan may feel like a small mistake, but it can have lasting effects on your finances. Missed payments can lead to late fees and higher interest rates. If your payment is more than 30 days late, it can also drop your credit score.
If you’ve missed just one or two payments and the situation was beyond your control, there may be a way to soften the impact. Writing a goodwill letter may help clear your credit report of this isolated mistake. Here’s what you need to know about how goodwill letters work, when to send one and the steps you can take to increase your chances of success.
What is a goodwill letter?
A goodwill letter is a formal letter sent to a creditor, lender or collection agency to request forgiveness for a late payment or other negative item on your credit report.
In the letter, you typically:
- Explain the circumstances that led to the late payment or issue.
- Express remorse and your intention to pay on time going forward.
- Describe how you plan to prevent the issue (for example, by using automatic payments).
- Request that the creditor consider removing or adjusting the negative item.
After reviewing your request, the lender may decide to make the requested changes to your account as a gesture of goodwill. However, if you’re going to send a goodwill letter, keep your expectations low because a letter often won’t make a difference.
Lenders are not obligated to honor your request or even respond to your letter. In fact, many larger lenders and credit card issuers state that they do not accept goodwill letters, as they are legally and contractually obligated to provide accurate reporting of account activity, including late payments. Still, some people report success trying this method.
Researching the creditor’s policies regarding late payments and goodwill adjustments may provide insight into the likelihood of success. If no clearly stated policy denies goodwill letters, sending one out may be worth the effort.
While there are no guarantees, a well-written goodwill letter may persuade a creditor to ask the credit bureau to remove the negative mark from your credit report. If the bureau agrees, the update could help prevent future credit difficulties.
A goodwill letter is not a credit dispute. A dispute asks a credit bureau to verify the accuracy of something on your credit report, while a goodwill letter asks creditors for leniency on a derogatory mark that is accurate.
When should you write a goodwill letter?
Consider writing a goodwill letter when you’ve had a late payment or other negative item reported on your credit report due to isolated circumstances beyond your control. Suitable situations might include a temporary financial hardship, medical emergency or personal crisis.
If you’re going to try asking for forgiveness, make sure the late payment or issue was a one-time occurrence and not part of a recurring pattern. Lenders are far more likely to show leniency if they see your missed payment as an isolated mistake rather than a sign of ongoing financial instability. They want reassurance that this issue won’t happen again, so only proceed with a goodwill letter if you’ve addressed the root cause of the problem and are committed to maintaining good financial habits going forward.
You may also have a better chance of success when you explain why your situation deserves understanding. Be specific and transparent, as this can help your creditor relate to your position and view it as a rare occurrence. Adding supporting documentation, such as hospital bills or layoff notices, can further strengthen your case, showing that the missed payment was truly out of your control.
Many lenders offer financial hardship programs that can help through difficult times. Most lenders prefer that you leverage these programs as soon as you start having financial difficulties, rather than missing payments and asking for forgiveness later.
Note that late payments aren’t reported to credit bureaus until they are 30 days or more late. You don’t need to write a letter if you miss a payment and correct your error quickly. You can pay any applicable late fees and make sure to pay on time in the future.
How do you write an effective goodwill letter?
A goodwill letter should be written formally, showing your lender that you take your late payment seriously. It shows respect for the process and a willingness to act professionally, which can work in your favor. You’ll also want to personalize your message, making sure to be sincere and polite.
When crafting your letter, consider the following points:
- Address the creditor or lender respectfully and thank them for their time.
- Clearly explain the situation that led to the late payment with relevant details and/or documentation to support your explanation.
- Own up to the mistake without excuses. Acknowledge any errors and express genuine remorse for any inconvenience caused.
- If applicable, emphasize your good payment history with the creditor. Mention previous instances of on-time payments or your long-standing relationship with them.
- Reassure the creditor that the late payment was a one-time occurrence and not typical of your financial behavior. Explain any steps you’ve taken to prevent future issues.
- Clearly state your request, whether it’s removing the negative item from your credit report, a late fee waiver or another form of leniency.
- Thank them for their time and express hope for a positive resolution.
Before sending your letter, carefully review it for clarity, accuracy and professionalism. Make any necessary revisions to ensure your message is clear and persuasive.
Here is an example template for a possible letter.
[Your Name]
[Your Address]
[Phone Number]
[Email Address]
[Date]
[Creditor/Lender’s Name]
[Creditor/Lender’s Address]
Dear [Creditor/Lender’s Name],
I am writing to address a recent late payment on my account with [Creditor/Lender’s Name].
[Explain the circumstances that led to the late payment or negative item on your credit report. Be honest and provide relevant details. Note any documentation you can enclose.]
I take full responsibility for the late payment. [Acknowledge any mistakes made and express genuine remorse for any inconvenience caused.]
Despite this incident, I have maintained a positive payment history with [Creditor/Lender’s Name]. [Highlight any previous instances of on-time payments or your long-standing relationship with the creditor.]
I assure you that this late payment was an isolated incident. [Reassure the creditor that the late payment was not typical of your financial behavior and explain any steps taken to prevent future issues.]
I kindly request [specific action, such as the removal of the negative item from your credit report, a waiver of late fees or another form of leniency].
Thank you for taking the time to consider my request. I appreciate your understanding and cooperation in this matter.
Sincerely,
[Your signature]
Also, list any additional documents included with the goodwill letter, such as proof of payment or hardship letters.
How do you send a goodwill letter?
Before sending a goodwill letter, consider starting with a phone call to your lender’s customer service department. Speaking to a representative can give you a clearer idea of their policies on goodwill adjustments and whether they are open to removing late payments from your credit report. Customer service may direct you to use a specific process, such as filling out an online form or emailing your request.
Some creditors prefer digital communication, so it’s worth checking their website or customer service policies to see if they accept goodwill requests via email. An email has the advantage of speed and allows you to track your message, but a formal, well-constructed letter sent through postal mail can often carry more weight.
When sending a paper letter, consider using certified mail. This allows you to confirm delivery and record when the letter was received, which can be helpful if there’s no immediate response. Although it costs a bit more, certified mail ensures your request isn’t lost in the shuffle.
Lenders aren’t obligated to respond to goodwill requests, regardless of the method used. However, choosing the right communication channel can increase your chances of reaching the right person and getting a timely response.
What if your goodwill letter is declined?
Throughout this process, it’s important to manage your expectations. A goodwill letter is a request for leniency, not a guaranteed solution. If the creditor doesn’t respond or denies your request, consider debt management alternatives, such as:
- Credit counseling if you need help managing your debt
- Dispute with the bureaus if you have inaccurate information on your credit reports
- Credit repair services if you need help disputing information and have the budget to pay for services
Depending on your circumstances, these options may help you get your credit back on track, despite the late payment.
What do you do if you never made a late payment?
If you notice a late payment on your credit report and believe you have made all your payments on time, you’ll want to take a different action. In this case, you can contact the creditor to address the inaccuracy or dispute the misreported payment directly with the three credit bureaus: TransUnion, Experian and Equifax.
Next steps
It’s always best to avoid late payments, but one slip-up doesn’t have to permanently damage your credit score. A well-crafted goodwill letter can sometimes convince creditors to remove the negative mark from your credit report. When writing your letter, be sure to highlight that it was an isolated incident, show genuine remorse and include any relevant documents to back up your case.
Remember that creditors aren’t obligated to honor your request, and you may not receive a response. If the letter doesn’t work in your favor, other options, like debt management, credit counseling or credit repair services may help you improve your score over time.
