Late payments can have a profound impact on your overall credit health, but the ramifications can extend far beyond having to pay a late fee or a penalty APR. Your payment history is the most important factor that makes up your FICO score, which means that even a single payment made more than 30 days late can cause your score to plummet — even if you’ve been relatively responsible otherwise. With that in mind, you should strive to pay all of your bills early or on time with no exceptions.
But, life definitely “happens” sometimes, and there may be situations where you forget a payment or fall behind and have to pay a bill past its due date. In that case, you may want to know about strategies that could have a late payment or two removed from your credit reports for good.
Goodwill letters, as they are often called, may be the answer you’re after if a blemish or two on your credit report is ruining your score. This guide explains how goodwill letters work and all the information you’ll need to include if you pursue this strategy.
What is a goodwill letter?
A goodwill letter is sent to the creditor that reported your late payments with the goal of having them remove the derogatory information.
Since negative reporting can stay on your credit report for seven years, it’s not difficult to understand how impactful a successful goodwill letter could be. If you were able to send a goodwill letter that results in late payments being completely removed from your credit reports, you could potentially enjoy a healthier credit score for years to come.
Note that goodwill letters are sent as a way of apologizing for your late payment, but also explaining your intentions to pay all your bills on time going forward. If a late payment is incorrectly reported on your credit report, you should instead take steps to dispute incorrect information with the three credit bureaus — Experian, Equifax and TransUnion. To help in that respect, check out Bankrate’s credit dispute letter template.
When you send a goodwill letter, you’re not asking the credit bureaus to do anything. Instead, you’re asking a creditor like a credit card company, your auto loan provider or even your mortgage company to erase the late payment and give you a second chance. There’s no guarantee that a goodwill letter will work, but you have nothing to lose by asking for some relief.