Goodwill Letter Template
Need to reboot your credit score? Sometimes all you have to do is ask.
When older collection accounts or late payments are pulling down your credit score, you should consider asking your creditors for a goodwill adjustment.
You can ask by writing a goodwill letter to your original creditor, the collection agency, or both.
Best case scenario, you’ll get negative items removed from your credit report with all three credit bureaus.
What Is a Goodwill Letter?
Goodwill letters are also known as a Goodwill Forgiveness Removal Letter.
Regardless of which name you prefer, here’s how you should write your letter.
First, know that goodwill letters should be unique and reflect your individual situation. They should also be brief and clear.
Ask for what you need: the blemishes removed from your credit history so lenders will let you borrow again.
But also explain why you’re asking for this kind of help. If you’re trying to get a mortgage and your old payment history is holding you back, let the creditor know.
Take responsibility for the missed payments or late payments, but also explain that the old negative marks on your credit don’t reflect your current habits and personal finances.
Explain how much a second chance could help get your financial life on track.
Goodwill Letter Sample
Here is my template. Use it as a guide as you write your own goodwill letter.
- Fill in all fields highlighted with your information
- Edit this letter liberally to reflect your personal tone, voice, and situation
- Remove highlighting
- Copy-paste your completed letter into a new document
- Print and sign
[Creditor Name or name of the credit reporting agency
Credit reporting agency/creditor’s address
Credit reporting agency / creditor’s City, State, ZIP]
Dear [Creditor name or name of credit reporting agency]
Dear Sir or Madam:
This letter is in reference to a paid collection with the account number [account number].
In [year] a collection for the amount of [amount] was sent to your agency due to [provide personal information and details].
While I normally make every effort to pay my debts and fulfill my responsibilities, in this instance I was, unfortunately, unable to do so. I have since gotten back on my feet and paid this debt to your agency.
I am writing today because I am now trying to [insert reason, examples: “buy a house,” “establish a credit card,” “access an auto loan,” etc.)]
I am having difficulties [repeat example and further clarify] due to having a collection on my account.
Given the date and amount of this collection, I am kindly requesting your agency consider removing this collection from my credit report as a gesture of goodwill.
Doing so would sincerely be appreciated and represent an invaluable gift to my family and me.
Thank you so much,
Your City, STATE ZIP]
When You Should Not Send a Goodwill Letter
I recommend sending a goodwill letter when older, negative information pulls down your credit score — assuming the negative information is also accurate information.
Federal law requires the credit bureaus and your creditors to report only accurate information about your credit history.
If a credit card company, student loan lender, medical clinic, or another creditor has reported inaccurate information you don’t need to send a goodwill letter. You need to send a dispute letter.
Inaccurate information hurts your credit just as much as accurate information. See my post about filing a dispute here.
You can dispute the negative information with the three credit bureaus — TransUnion, Equifax, and Experian — or with the creditor itself. Sometimes you have to send dispute letters to the bureaus and your creditor.
A lot of people with medical bills have to write dispute letters because of problems with insurance or hospital billing.
What Happens After Sending a Goodwill Letter?
Unlike with a credit dispute, the law does not protect your right to a goodwill forgiveness removal. The creditor or collection agency has no requirement to even respond to your letter.
But most creditors and collection agencies respond in some way. In most cases, you should get a letter back within three to four weeks.
The letter should let you know whether the creditor made a goodwill adjustment in your account.
It’s possible you may get a phone call in response to your letter.
Remember that goodwill adjustments are much more likely to happen when you have one or two blemishes such as late payments or missed payments.
If you have a long history of continuous late payments, the creditor will be less likely to make a goodwill adjustment.
But if your late payments are an anomaly on your credit report, a goodwill letter may be just what you need to remove the negative items.
Credit Repair: More Than Removing Blemishes
Negative information can pull down your credit score, and getting these blemishes removed could repair your creditworthiness.
But there’s another angle you should work if you’re trying to get your credit back in good standing: Adding positive and accurate information to your credit history month after month.
Each time you make an on-time payment on your student loan, house payment, or auto loan, you’re gradually building positive credit momentum which could improve your credit score.
Paying down all your credit cards to 25% of your credit limit will also add more positive information to your credit file.
Together, your payment history and your credit utilization ratio make up 65% of your FICO score. That’s a huge portion of your score.
If you can make timely payments, consistently, and keep your credit limits paid down, beginning today, you could start to see improvements within a few months.
Out With the Old – In With the New Credit Data
For best results, you should worth both credit repair angles simultaneously:
- Removing Data: remove blemishes by writing goodwill letters (for accurate information) and dispute letters (for inaccurate data).
- Adding Data: establish a strong foundation of creditworthiness by making on-time payments and keeping your credit cards paid down. Sync your bank account with your creditors and set up autopay if you can.
Credit scoring models emphasize newer information over the old information in your credit file. So adding new, positive credit information can be a powerful tool.
However, an old negative item that’s a bankruptcy or foreclosure will be difficult to overcome.
Having this kind of financial hardship on your credit report will pull down your score for seven years (10 years for Chapter 7 Bankruptcy).
Limitations of a Goodwill Letter
If you could get a serious problem like a bankruptcy removed through a goodwill letter, you would see a significant jump in your credit score. Unfortunately, this isn’t very likely.
Goodwill letters work best when you need to erase late payments, or possibly even collection accounts, from your credit report. But removing a court judgment like a bankruptcy is another matter.
Time is your best tool in this case. Eventually, the judgment will age off your credit report.
Developing good credit habits now will put you in a position to have excellent credit when the bankruptcy ages off your credit report.
Here’s another limitation of goodwill letters: When you ask for a favor, you can’t expect guaranteed results.
The creditor is under no legal obligation to help you out. So make sure your goodwill letter is honest and compelling!
Elements of Your Credit Score
Above I mentioned that your payment history and credit utilization ratio comprises 65% of your FICO credit score which lenders use when you apply for a loan.
The other 35% of your score comes from:
- Mix of Credit Accounts (10%): Having an active mortgage, student loan, auto loan, and a couple credit cards would create a good mix of credit accounts. Having only one kind of credit account open could pull down your score some.
- Average Age of Credit Accounts (15%): Keeping your credit accounts open and letting them age can help your credit score. You can’t fake this if you’re just starting out in life or if you’re rebuilding your credit. You’ll have to wait for your current accounts to age. Leaving some accounts open after you’ve paid them off can help with this, too.
- New Credit Checks (10%): Limiting new credit inquiries can help your score, too. Hard inquiries happen when you apply for a loan. Applying for credit cards and personal loans more than three times a year could pull down your score. A soft inquiry (like when you check your own credit score or get pre-approval on a loan) will not hurt your credit score.
I mention this breakdown because if you write a successful goodwill letter to remove a late payment or missed payment, you’ll still need to keep your credit report in good shape.
Monitoring your credit use is key to getting the best interest rates and lowest borrowing fees from most financial institutions.
Credit Repair Companies Can Help
Seeking credit disputes or goodwill adjustments will take some time and focus. If you’d rather hire a professional to do this kind of work I understand.
I suggest you check out Lexington Law.
This credit repair company has attorneys and paralegals on its staff. If you have inaccurate information pulling down your credit score, Lex Law will find it and fix it.
You’d have to pay a monthly subscription fee to get Lexington Law on your case. There’s an initial set-up fee, too.
If you can afford to spend $100 or so a month, this company can make your life easier.
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Disclaimer: These letters are provided for your information only and are not intended to be legal advice. You are responsible for all content and all consequences if you adapt these template letters for your personal use. As with all legal matters, if you have concerns about the potential legal consequences of sending a goodwill letter, you should consult with a licensed attorney.