When I inform my clients that I am going to write a letter of goodwill asking their creditor to erase negative items reporting, I get 1 of 2 reactions:
A: I already asked and they said No, or
B. And I’m paying you for this?
The latter is always entertaining. I have had a decent amount of success with goodwill letters; it’s a low risk, high return approach to removing derogatory information from your credit reports. I've had items from Sallie Mae, Chase, Capital One, Barclay and plenty of others on both revolving and installment accounts using this method. As with anything, they are not guaranteed. But do give it a try!
Here are a few tips to write your own.
The most important thing to remember is that you are asking for a favor; thus goodwill letters should be a ‘Please Baby Baby Please!’ type of letter rather than ‘Delete Immediately Or I Will Sue!’ type of letter. They should go out to Collection Agencies and Original Creditors only; credit bureaus and public record officials will laugh at you hysterically if you send them a goodwill letter. Remember to be pleasant, personable, and to state the specific change(s) you would like them to make to their account listed on your credit report. Again, you are asking for a favor.
What type of accounts are best suited for the goodwill method?
Late Payments on Open and Closed Accounts, Paid Collections, Paid Charge-Offs.
If you haven’t brought the account current, settled or paid the account off in full you can forget it. The idea that a company will remove or update an item when they still haven’t gotten their money is pretty much not gonna happen. Has it been done? I've heard it has but I sure haven’t experienced it!
Writing the Letter
The best letters are those that make the person reading it feel good about deleting or updating an item for you. They want to help you succeed in improving your finances, they want to ease your woes by giving you a bit of good news among your sea of bad events; they want to believe that you've learned your lesson and shouldn't suffer for the next 7 years for your past money mishaps.
When forming your letter, be sure to include the account number, your name and the address that you had when the account was open (if you have it) so that they can easily look up your account. Obviously, if the account is still open this is a given. And please do not use a template found on the Internet. How sincere are you being by using the copy and paste functions on your keyboard?
Customize the letter; personalize it; I've even had clients include a picture of their kids and write how they want to purchase a home for them but the negative reporting is hindering them from obtaining a loan. If you need a general idea of how to formalize your letter; do study the template; but nothing else. DO NOT COPY AND PASTE!
Write of how you got into this predicament: Death in the family, divorce, job loss, medical illness (yours or immediate family member), disability, etc. Let them know that you didn’t willfully let the account go into arrears and the steps you took to try and avoid the late payments, charge off, etc. Also detail what steps you are taking now to ensure that it won’t happen again (especially important if the account is still open).
Lastly, inform them of what you want them to do – “remove the late payments”; “remove the charge off”; “delete the collection”, “change the remarks”; etc.
How to send the letter?
The letter should go out regular mail or first class mail; no need for certified mail as it appears too formal and technical; you’re going for a more personal feel. I’ve had a good deal of success doing the following:
1. Calling and ask. The customer service rep on the phone will typically say No, which is why you need to escalate the call to someone who does have the authority to make that decision.
2. If denied, mail a letter personally addressing it to someone higher than the person I originally spoke with (this is usually available on their website or by calling and asking; press releases are very informative as well),
3. Wait 2-4 weeks for a response, follow up with an email (again press releases or planetfeedback.com) or telephone call; fax works as well.
By now I have most certainly gotten my yay or nay; but please believe 30-60 days later I’m asking again.
Who to address the letter to?
With the initial letter, I’ve addressed the letter to a specific person (president, customer service manager, CFO, etc) and with a general “Dear Sir/Madam” salutation. Both work, neither sticks out as having more success than the other so whatever works for you
The only time I’ve addressed the letter to a specific person is when I was denied by a supervisor and/or manager and needed to escalate my request to a higher executive. Now, that works more than Dear Sir/Madam.
NOTE: If you are starting with a letter rather than a phone call, then you definitely want to do some research on who the Senior Agents, Supervisors, or Managers are over the department. If your account is closed, the regular customer service department may no longer have your account. The easiest way to do this is to call. Your other options include looking on their website, their company directory, or researching via Google.
I will usually get a letter of response with either an acceptance or denial. In some cases I don’t get a response at all, the deletion or update will just show up on the credit monitoring service.
One denial that’s pretty common is “It is illegal for us to report untrue information to the credit bureaus”. I completely ignore this, any information furnished to the bureaus are completely voluntary; there is no law stating a company has to report anything to the credit bureaus about us. So, if they decide to remove negative information early they are completely within their legal rights to do so, and we are within our legal right to make the request.
It is important for me to say that you be very specific on what you want them to do. I have heard of creditors deleting information that needed to be updated, resulting in scores lowering due to the age of the account and a drop in credit utilization.
Overall, the worst thing that could happen is a big fat NO. But don’t fret, be patient, and just keep trying!.
Hope this helps!