If you got behind on bills and have late payments showing up on your credit report, you may have read that it’s a good idea to send a goodwill letter. A goodwill letter is a letter in which you say you are sorry for the late payment and ask them to please remove them from your credit report. Big mistake!
Rarely, will a creditor remove a late payment simply because you are a nice person and they are a nice company — and with everyone being so nice and all — let’s just erase that bad mark on your report.
Who do you think they are, your mother?
Put yourself in the place of a large company, say someone like Capital One. You go to work and open 100 envelopes. 98 of those are letters asking you to remove the late payment for no valid reason other than “goodwill.” What are you going to do?
Are you going to sit right down, compose 98 letters to the three credit bureaus and send them off just so you can do 98 good deeds today? And the same thing tomorrow and all five days of the week? Are you going to remove thousands of late payments simply because the customers said “sorry”? Are you going to send messages to thousands of people, in essence, telling them that failing to pay on time is no big deal?
Capital One is one of the creditors that does not respond well to goodwill letters, and maybe now you can see why.
This is why in Repair Your Credit Like the Pros, I say, “throw those goodwill letters into the trash bin.” Most of the time they don’t work. But wait, there are exceptions.
One of my book readers had recent late payments due to a natural disaster that caused her music business to flood; which, in turn, prevented her from conducting music lessons. She drove into her bank and spoke with the branch manager. She explained the reason why she temporarily lost her income and ability to pay, and that now with the water gone, she was again teaching music and receiving income.
The manager not only removed the late payments, he also reversed the late fees!
The two elements of success to this story is that the cause was a natural disaster and that the woman had taken the initiative to speak with the manager who had authority.
While the general goodwill letters for removing late payments are usually a waste of time, if you have a valid and verifiable reason why you, as a perfect paying customer, were temporarily late and are now back on track, you should make a sincere effort to ask for grace (in person preferably, but on the telephone if distance prevents). You might be surprised, as another reader in Florida who had been victim of a hurricane was, when the late payments are removed.