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Many people might think that when they make a mistake in their financial lives, the repercussions can follow them around for the rest of their lives.

A missed payment on a credit card or bill, or a defaulted car loan in London, can have devastating consequences for your credit score. Sometimes these mistakes are our own faults for mismanaging our money, and we simply have to take the fallout on the chin.

However, there are times when missed payments and defaults were due to circumstances outside of our control, or there were extenuating conditions that prevented us from making those payments. This is where a goodwill letter could help reverse some of the damage.

So how can a goodwill letter help rebuild your credit score?

A well timed and written goodwill letter can make all the difference when it comes to your credit score and getting bad entries removed. We explain everything you need to know about this technique in our comprehensive guide below. Read on to find out more!

Man writing goodwill letter for bad credit car loan london

What is a goodwill letter?

Before we can tell you how a goodwill letter will help you repair your credit score, we need to first explain what it is exactly.

A goodwill letter is a written statement from yourself that you send to your creditor explaining the circumstances surrounding why you were unable to make those payments and asking them to remove the entry from your credit file as a sign of goodwill. These letters are a chance for you to explain your situation and appeal to the compassion of the creditor, putting a face to the number in their system and allowing you a chance to get a past mistake removed.

These letters are not all that well known amongst the general public, and so are not used very often. This actually works in your favour, as if everyone was sending goodwill letters, they would likely lose their efficacy and would not be approved as often. As such, we recommend you use these sparingly, at least with the same creditor. Multiple goodwill letters to the same lender will likely raise some red flags for them and lead to them being rejected and no entries being removed from your credit history.

How can they help?

Goodwill letters can help by giving you a chance to get a past mistake removed from your credit history, often leading to a boost in your credit score.

Your credit history contains every interaction you have had with a credit provider over the past 7 years. Things like credit applications and inquiries, revolving credit accounts, mortgages, personal loans, and London car loans all appear on your credit file and all combine to impact your credit score.

Unfortunately, your credit history also makes note of any time you were late with a payment, defaulted on a loan, or declared bankruptcy. Any of these scenarios can lead to your credit score taking a nosedive, which can adversely affect your ability to apply for credit in the future. As we already mentioned, sometimes late payments or defaults come about due to uncontrollable circumstances in our lives, which is when a goodwill letter is a good option.

A properly worded and timed goodwill letter can help improve your credit score as the lender with which you made the past mistake will inform the credit bureaus to remove it from your credit file (assuming you have corrected the past mistake, of course). This will often lead to a jump in your credit score and will help you apply for new credit with competitive interest rates moving forward.

When should I send a goodwill letter?

The timing and situation in which you would send a goodwill letter is crucial to maximising the chance that it will be well received.

If you were unable to pay your credit card bill or had to default on your car loan because you splurged on a new coat or took that vacation you couldn’t really afford, a goodwill letter is likely not going to help you. Any situation in which mismanagement of your funds was the main reason for the credit issue, you will need to accept the hit to your credit score as there is likely nothing a goodwill letter can do for you.

On the other hand, if you were unable to pay your bill because your house burned down, or you had to attend a family funeral and a car loan repayment fell through the cracks, a goodwill letter is a great way to have that negative line item removed from your credit history. Any circumstance that involved compassion or tragedy is perfectly suited for a goodwill letter.

Woman writing goodwill letter for bad credit car loan london

How do I write a goodwill letter?

Once you have decided that a goodwill letter will help your case, it’s time to get down to actually writing the thing. It’s a nuanced and delicate format that requires some deft use of language and structuring of your argument, so we have put together some tips to help you write the perfect goodwill letter.

Be polite and deferential

First and foremost, you will want to ensure the entire tone and language of the letter is polite and deferential to the person reading it.

A goodwill letter is essentially you asking your credit provider to do you a favour. Even when you ask your close friends and family to do you a favour, you are likely pretty polite and nice to them. Your credit provider has no emotional or personal connection to you, so you need to ensure you are extra polite in order to put them in the right frame of mind when they pick up your letter. Using plenty of “please”, “thank you”, and not making any demands in the letter is a great way to make your lender more receptive to doing you a favour.

Be concise and to the point

No one wants to read an essay when they are being asked for a favour, so don’t turn your goodwill letter into one.

Explain the circumstances surrounding your missed payment clearly and concisely, without too much emotional language. If your house burned down and that’s the reason you missed your car loan payment, explain what caused the fire, that you were escaping with your loved ones, and dealing with insurance and temporary housing issues, which caused you to miss your payment. Do not explain in great detail how the situation made you feel or how it impacted other areas of your life. Keep it focused on how it impacted your ability to repay your lender so that they remain interested in your case.

Back up your case with evidence

Once you have explained your situation, it’s time to show them the receipts.

Anyone can say that something happened to them that prevented them from making their payments on time. What will make the difference to the credit provider is having hard evidence that backs up the statement. Attach any invoices you have for lost possessions, any travel itineraries you have for attending funerals or important events, and even letters from important people like lawyers or religious leaders can add substance to your claim. If you can make it undeniable to your lender that this situation actually happened and it had a real impact on your ability to repay them, they will be more likely inclined to help you out.

Send it to the right person

Now you have you perfectly written goodwill letter, it’s time to make sure it gets into the right hands.

Do some research on your credit provider to find out who would be the best person to address your goodwill letter to. You don’t want to send it to the generic customer relations email if it can be avoided, so dig a little deeper and find out which specific person or department handles goodwill letters. This can involve sifting through their website, finding employees on LinkedIn, or calling their reception to ask who the relevant person would be. Having a personally addressed letter instantly makes the reader more invested in what it has to say, so addressing it correctly can make all the difference in getting it approved.

Follow up if you haven’t heard back

Once you have sent it off to the right person, make sure you set a reminder to yourself to follow up after a couple of weeks.

Much like with job or rental applications, sometimes the recipient just needs to be reminded about the issue in order to get a response. Lenders are likely very busy dealing with all of their customers, and so it is entirely possible that a goodwill letter is read and then lost under a pile of other documents on their desks. Sending off an email or giving them a call to ask if they had any feedback on the letter can be just what they need to remind them and have them let you know their decision. Even if they don’t accept the letter, it’s better to know the outcome sooner rather than later so you know where you stand.

What if it doesn’t work?

If the worst case scenario comes to pass and your goodwill letter isn’t accepted, what do you do then?

Don’t worry, all is not lost. If you are unable to get a particular entry on your credit history removed, it’s time to refocus your efforts on improving your score in other ways. Some expert tips on how to boost your score include:

  • Pay down your debts with regular, on time repayments
  • Try to keep your credit utilization ratio to 30% or less
  • Pay off credit cards but don’t close them unless they have significant membership fees
  • Speak with a credit repair agency that specialises in credit score improvements

If you follow all of the above tips, your credit score is sure to get a boost over time. With an improved credit score, you will be able to negotiate better interest rates on more competitive loans, which can allow you to take out a mortgage or car loan when you need to.

Are you looking for another way to rebuild your credit score while getting the car you need? London Bad Credit Car Loans offers an exclusive credit rebuild program through our bad credit car loans. We negotiate the lowest possible interest rates with reputable credit providers to give you a high quality loan for a car you’ll love. By making regular, on time repayments on your bad credit car loan, you will be able to rebuild your credit history and improve your credit score. If you’re ready to take control of your finances, contact our car loan experts today and see what we can do for you.

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