After years of spotless credit, let's say you've harmed your excellent credit score by missing a payment. Perhaps you've had an unexpected accident or medical expense that disrupted your payment schedule, or maybe you simply had a brain cramp and forgot to submit your payment on time.
You've made good on the missed payment, along with any late fees – but now you have a black mark on your credit history that will drop your credit score and be a factor in your credit score calculations for up to seven years.
However, you may have an alternative. You can attempt to have the late payment removed from your credit report by sending a goodwill letter to the creditor that reported the missed payment.
A goodwill letter is different from a letter disputing a charge or a payment status. In a goodwill letter, there's agreement that your action was wrong. You're just asking for mercy, explaining the circumstances and making the argument that it won't happen again.
Put yourself in the position of the creditor that receives your letter. Why should they give you a break on a legitimately missed payment?
Use your letter to highlight the overall positive relationship (assuming that's true). You've been a good regular customer and would like to continue that relationship and re-establish trust in your repayment schedule. Businesses understand that even good customers make mistakes. If your overall history seems to warrant a break, they'll be more inclined to accommodate your request in order to keep you as a customer.
If there are extenuating circumstances, let the creditor know – but it's important to stress that the circumstances are unlikely to happen again. A temporary issue caused by a job loss is understandable, but the creditor must feel comfortable that your new job is stable and that regular payments will continue.
If the cause is a technical error or a timing issue on your part, such as a lost check or an electronic deposit to cover payment funds that didn't post on time, explain the steps you've taken to prevent future missed payments.
The creditor should receive a clear message – it's your mistake, you've learned from the mistake, you're sorry, it won't happen again, and could they please give you a second chance?
Goodwill letter templates are available online to give you inspiration. It's important to keep the tone positive, noting that you're asking for a second chance to maintain a good credit relationship. Don't directly ask to remove negative information (as that may violate some creditor's agreements with the credit bureaus). Ask for a goodwill adjustment or revision instead.
Above all, be polite. The effect may be the same, but it matters how you ask.
Your chance of success with a goodwill letter is much greater if you have a generally clean credit history and a solid record of repayment. Missing the fourth payment you've ever made in your life is harder to forgive than missing your four-hundredth. Similarly, it's easier to ask for removal of a missed payment in the recent past, assuming you've made all your payments since then to prove that the missed payment was an isolated error.
Rather than let a single blemish affect your credit score for years, why not ask for a second chance? The worst that can happen is that your creditor refuses, and you're no worse off than you were – but if your request is granted, the adjustment could save you money through an improved credit score and better interest rates in the future.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips.