If you fail to make a loan repayment on time and it’s been thirty days past the due date, the lender can report late payments to the credit bureaus. This can lead to a massive drop of 180 points from your credit score, making you run for the best credit repair companies in Houston.
What’s worse, late payments can stay on your credit report for up to seven years. This, in turn, can make it extremely difficult for you to obtain any new lines of credit with favorable terms, get insurance, or secure employment at reputable organizations.
For that reason, we recommend using goodwill letters to get late payment labels removed from your credit reports as soon as possible. In this post, we’ll explore the concept of goodwill letters and learn how to write an effective one. Let’s get started!
What Is a Goodwill Letter?
By definition, a goodwill letter is a written request where you ask your creditor to consider removing ‘late payment’ or related negative remarks from your credit report. Note, if you are sure you haven’t missed a payment, it’s best to file a dispute. A goodwill letter in that case doesn’t make sense. Because this is not a legal document or a contract, the creditor has the option to approve or deny the request.
For that reason, it is essential to pay attention to the content of your goodwill letter. Make sure it’s convincing, concise, and honest. The following are some key elements that you must include in your goodwill letter:
Explanation
Clearly state what caused the delay in payment. Whether it was a personal emergency, unexpected financial hardship, or a technical error, make sure you explain it precisely and comprehensively. At the same time, it’s not a good idea to exaggerate your situation or sketch a false scenario. The creditor may ask for evidence if they’re suspicious of your explanation.
Apology
Take responsibility for your mistake and apologize for the inconvenience you caused to the creditor. Also, sincerely assure them that you will try your level best to avoid any such occurrences in the future.
Request
Once you’ve explained yourself and expressed remorse, clearly state the actions you want them to take (in this case, it could be removing negative remarks from your credit reports or waiving late fees). Also, mention why their action is important to you. For example, you could mention that you want to apply for a car loan or you want to set things right with the creditor.
Gratitude
Conclude your letter by thanking them for taking the time out for reading your letter and considering your request. Also, reinforce how much the approval of this request means to you.
How to Write a Goodwill Letter to a Creditor
Above, we’ve reviewed the key elements of a goodwill letter. Now, let’s check out the structural components of a goodwill letter. These are:
- Date
- Your name
- Your address
- Creditor’s name
- Creditor’s address
- Your account number
- The main body of the letter
- Your signature (optional)
If you are not confident in your writing skills, you can hire a professional writer to do the job for you. Or, you can use any of the free goodwill letter templates available online.
When opting for a template, make sure you pick a goodwill letter template for late payments and not anything else. There are many different kinds of goodwill letters, such as appreciation letters, apology letters, fee waiver letters, etc.
Also, when you settle for a template, make sure you customize the content. Do not send it to your creditor as it is—it may give a really bad impression and reflect a lack of effort.
Overall, you want to ensure the tone of this letter is professional and respectful, and that length is no longer than one page. Use short paragraphs, easy-to-read sentences, and proofread your letter for any typos and grammatical errors.
When to Send a Goodwill Letter
You should send a goodwill letter for late payment immediately after your creditor reports you to the credit bureau. If your creditor is kind enough to inform you before reporting, you can send a goodwill letter right at this point. But, if they do not send a notice your way and you know you have missed a payment, it’s best to wait for a few days until the late fee is applied.
Note that your creditor is highly likely to appreciate and respond to prompt action. If you delay sending a goodwill letter, it may come off as carelessness from your end.
For more helpful information about rebuilding credit, make sure to read our posts on how to repair business credit and how Experian Boost works!