A study on the effectiveness of goodwill credit letters
A goodwill credit letter is also referred to as a goodwill adjustment letter or goodwill deletion letter – this is a unique letter that you can write to one of the credit bureaus (Equifax, Experian, TransUnion) requesting them to remove a negative item on your credit report. This negative item can be a payment made a few months before the charge-off, a collection account, or even a bank rut.
The purpose of a goodwill letter is, to be blunt, to plead with the credit bureau to ‘have a heart’ and remove the negativity from your credit report because it is an ‘outlier’ to the rest of your clean record. You are still expecting the credit bureau to listen to you and show a little empathy for your circumstances.
But do these goodwill credit letters pay the trick? Is there any truth to the fact that you can get your credit improved just by asking for it? So, let me deep dive a bit.
The Limited Impacts: Results of Goodwill Letters
Nevertheless, it appears that the success of goodwill letters is not very high as a whole. While evidence shows that goodwill letters are effective in their aim to remove negative items; it is highly important to note that the success rate of goodwill letters is rather low, with most sources claiming that only 25-35% of goodwill letters are successful in getting rid of negative items. But, it can be different depending on some factors, which can be more or less favorable for you.
Based on consumer reports, goodwill letters seem to have the most success when all the following criteria are met: Based on consumer reports, goodwill letters seem to have the most success when all the following criteria are met:
- It is the first and only unfavorable product attribute for you. If there is more than one negative item, the chances of approval drastically decrease.
- The negative item is an isolated entry which is normally a positive payment record. In my experience, if you are a consistent late payer, you will not get any understanding from them.
- The negative item is less significant and recent as compared to any other negative item identified about this company. The probability of a single 30-day late payment made 2 years ago is much higher than the number of late payments that occurred 5 years ago.
- You have no prior record of missing payments or anything adverse to your credit score. This goes a long way in supporting the argument that the negative item can rightly be considered an outlier.
- In other words, you have been honest, polite, and persuasive in your letter asking for its removal. More on this later.
However, if all those dovetails you’re a perfectly satisfactory credit customer who has made one mistake – then a well-written goodwill letter may be your ticket to getting the mark expunged.
Yet, that’s a lot of “ifs. ” While those with squeaky clean backgrounds can expect to have a higher chance of being granted a loan, for the average Joe with a not-so-clean past, the likelihood is very slim. However, to write a goodwill letter, you don’t have to do much and the return could be quite rewarding. Just keep expectations realistic.
How to Write a Goodwill Letter: Step-by-Step
If you do decide to write a goodwill adjustment letter, make sure you follow these tips to maximize your chances of success: If you do decide to write a goodwill adjustment letter, make sure you follow these tips to maximize your chances of success:
1. Send a separate letter to each credit bureau that has the negative item on your credit report, whether it is Equifax, Experian, and/or TransUnion. Do not send a letter to the first party only where you have debts. Full-credit bureaus have the exclusive right to delete the items in question if they so wish.
2. Be polite and gracious. Say, thank you instead of frowning, grumbling, or becoming angry. It is here that you hope to appeal to their goodwill and hence comport yourself well.
3. It is equally relevant to recognize the particular form of a negative item, as well as the account name and the dates. Give assurance that if it is not, it is reported inaccurately if at all possible on the business day.
4. Accept full-blanket blame for the negative item—do no excuse-making. Then describe the events that contributed to the existence of this anomaly which is not typical of you.
5. Remember to mention your otherwise clean slate in terms of paying bills on time before and after this incident. Offer any other evidence suggesting that you are a usually good credit risk and a good credit risk in this particular case.
6. Calmly make your official request for deletion and inform the receiver of your willingness to give out any other information that would help remove goodwill. Express your gratitude for their willingness to help you in this manner.
It is best to be specific but brief and to ensure that the correspondence does not sound like a threat or an attempt at making demands. You are in a way requesting help, not laying down your entitlements. Ideally, place the letter on physical letterhead so that the recipient can see that you are credible.
Depending on the credit bureau, you shall wait for 30-60 days for a renewed report or a direct response on whether they have agreed to the goodwill deletion request. However, do not be surprised if the negative mark is removed from your credit report and never heard from the credit reporting agency.
Alternatives to Goodwill Letters
In case your goodwill letter attempt yields negative results, don’t despair, all is not over yet. You still have options to try removing or minimizing the impact of negative items, including You still have options to try removing or minimizing the impact of negative items, including:
Dispute Inaccurate Information: If you can provide evidence that the negative item is false in a way, then send an official complaint and ask for the account to be deleted promptly.
Negotiate with Creditors: For instance, you may be able to negotiate a win-win arrangement with the original creditor to have the negative item removed once you pay the outstanding balance.
Wait Out the Clock: Many negatives tend to disappear from your credit report on their own after 7 years. Bankruptcy might last up to 10 years. If one has the time, they should just work on rebuilding credit until the time it is possible to get the arrest record expunged.
In conclusion, as helpful and sometimes beneficial as the do-goodwill credit letters may be, they should not be relied on as a form of credit repair. However, effective written communication where a letter presents your situation fairly will have no drawbacks. Just don’t get too seriously set on attempts with the idea of them being successful.
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