How To Write a Goodwill Letter for a Closed Account: Rebuilding Your Credit and Relationships
Rebuilding your credit after a closed account can feel like an uphill battle. A well-crafted goodwill letter can be your secret weapon, potentially leading to a positive resolution with your creditor and a boost to your credit score. This comprehensive guide will walk you through the process, from understanding when to write one to crafting a persuasive and effective letter.
Understanding the Power of a Goodwill Letter
A goodwill letter is a formal request to a creditor to remove a negative mark from your credit report. This negative mark might be a late payment, a charge-off, or even a collection account resulting from a closed account. These marks significantly impact your credit score, making it harder to secure loans, rent an apartment, or even get certain jobs. By demonstrating remorse and a commitment to responsible financial behavior, a goodwill letter can persuade the creditor to show leniency and improve your credit profile.
Why Write a Goodwill Letter After Account Closure?
Even after an account is closed, negative information can remain on your credit report for years. A goodwill letter offers a chance to directly address the issue with the creditor and plead your case. This is particularly beneficial if circumstances beyond your control led to the negative account status. It's a proactive and personalized approach that often proves more effective than simply waiting for the negative information to age off your report.
When is a Goodwill Letter the Right Approach?
Before drafting your letter, consider the circumstances surrounding the closed account. A goodwill letter is most effective when:
Situations Where a Goodwill Letter Might Work:
- Unexpected Job Loss or Medical Emergency: These situations are often understood by creditors as extenuating circumstances. Clearly explaining the impact on your ability to make payments can increase your chances of success.
- Honest Mistakes: If the negative mark stems from an honest oversight, a sincere apology and explanation can go a long way.
- Long-standing Positive Payment History: If you've had a strong track record with the creditor in the past, this can be a powerful point in your favor.
Situations Where a Goodwill Letter Might Be Less Effective:
- Fraudulent Activity: If the negative mark is a result of fraudulent activity, a goodwill letter is unlikely to be successful.
- Consistent Pattern of Late Payments: A history of consistent late payments demonstrates a lack of financial responsibility, making a goodwill letter less persuasive.
- Account Sold to Collections: Once an account is sold to a collections agency, the original creditor likely has less control over the situation. Dealing directly with the collections agency may be necessary.
Crafting Your Persuasive Goodwill Letter: Step-by-Step Guide
The key to a successful goodwill letter is sincerity and professionalism. Avoid emotional outbursts or accusatory language. Here's a step-by-step guide:
1. Address the Letter Properly:
Begin with a formal salutation, including the creditor's name and address.
2. Briefly Explain the Situation:
Clearly and concisely explain the circumstances that led to the negative mark on your account. Be honest and factual, avoiding excuses.
3. Express Genuine Remorse:
Show genuine regret for any missed payments or other issues. A sincere apology goes a long way in demonstrating your commitment to change.
4. Highlight Positive Changes:
If you've taken steps to improve your financial situation, such as budgeting or seeking financial counseling, mention them. This showcases your commitment to responsible financial management.
5. Request Removal of the Negative Mark:
Politely request that the creditor remove the negative mark from your credit report. Be clear and concise in your request.
6. Proofread Carefully:
Before sending your letter, proofread it carefully for grammar and spelling errors. A well-written letter demonstrates professionalism and attention to detail.
Example Goodwill Letter Template
[Insert Name] [Insert Address]
[Date]
[Creditor Name] [Creditor Address]
Dear [Creditor Contact Person],
I am writing to request your consideration in removing a negative mark from my credit report concerning account [Account Number]. Due to [briefly explain reason for negative mark, e.g., unexpected job loss], I experienced difficulty making timely payments. I deeply regret any inconvenience this may have caused.
Since then, I have [explain steps taken to improve financial situation, e.g., secured new employment, created a strict budget]. I am committed to maintaining a strong credit history going forward.
I would be grateful if you would consider removing this negative mark from my credit report. Thank you for your time and consideration.
Sincerely, [Your Name] [Your Phone Number] [Your Email Address]
Following Up on Your Goodwill Letter
After sending your letter, allow a reasonable amount of time (typically 30-60 days) for a response. If you haven't heard back, consider sending a polite follow-up email or phone call.
Maintaining a Positive Credit History
Even after a successful goodwill letter, it's crucial to maintain a positive credit history. Continue making on-time payments, keep your credit utilization low, and monitor your credit report regularly.
Alternatives to a Goodwill Letter
If a goodwill letter is unsuccessful, explore other options for credit repair, such as credit counseling or working with a credit repair company.
Conclusion
Writing a goodwill letter requires careful consideration and a sincere approach. By following the steps outlined in this guide, you can significantly increase your chances of a positive outcome, improving your credit score and rebuilding your relationship with your creditor. Remember to be honest, polite, and demonstrate your commitment to responsible financial behavior. The effort invested can lead to significant long-term benefits for your financial well-being.
FAQs
How long does it take for a creditor to respond to a goodwill letter? Typically, you should allow 30-60 days for a response.
What if my request is denied? If your request is denied, don't be discouraged. You can always try again later or explore other credit repair options.
Should I send my goodwill letter via certified mail? Using certified mail provides proof of delivery, which can be helpful if you need to follow up later.
Can I write a goodwill letter for multiple accounts at once? It's generally best to send separate letters for each account to allow for a more personalized approach.
What information should I not include in my goodwill letter? Avoid making excuses or blaming others. Focus on taking responsibility for your actions and demonstrating your commitment to change.