It was good, but I wanted it to be excellent.
Earlier this year, I noticed that a late payment had caused my credit score to drop to lows of 700: above average for my agebut below the upper range that creditors – especially mortgage lenders – reward with the best interest rates and terms.
Repairing a damaged credit score can take some time. As I soon learned, my late payment would stay on my credit report for seven years, weighing on my score the entire time. It can also be expensive. Credit repair companies take advantage of the somewhat opaque process to charge unnecessary fees to spot and dispute negative items on your credit report.
But I was able to make two moves, each free and together requiring about an hour of work, which increased my credit score by 84 points in one month – and over 100 points in total over the course of 2021.
Here’s how I did it and how you could do it too – including a sample letter you can adapt that helped clear my late payment from my credit report.
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1. I wrote a “letter of goodwill”
Missed or late payments are a surefire way to lower your credit, as payment history is the most influential factor in your score. It represents 35% of your FICO score, the most common scoring method used by lenders.
In April, after opening a new line of credit to pay for dental work, I discovered that I had missed a payment due in January, delaying it by several months. Discouraged by the prospect of paying the price for seven years (the length of time a default reported as a late payment stays on your report), I looked for ways to reverse the error faster.
I wrote what’s called a goodwill letter, basically a polite way to ask your lender to change the way it reports certain behaviors to the three credit bureaus responsible for compiling credit reports. Your lender is under no obligation to comply with this request, and in fact the banks are Required by law to report accurate information to credit reporting agencies. Some, including hunt and Bank of Americastate on their websites that they will not make goodwill adjustments for late payments.
But anecdotal evidence suggests that at least some creditors are willing to accommodate late payments. If you can demonstrate that you’ve been a responsible customer in the past and provide a credible explanation, it’s worth it. The worst they can do is say no.
I wrote a goodwill letter about 30 minutes after reading stories of other successful people online. In it I explained how my late payment was due to opening a card with a new bank and not being able to follow how to make payments on the account.
On April 30, I logged into my account on the bank’s website and sent this:
[My Account Number]
Thank you for taking the time to read this letter. I am grateful to be your customer.
I am writing to you because I noticed that my most recent credit report contains a late payment reported in January 2021 for my [name of bank] financing loan.
I want you to know that I understand my financial obligations and take my commitments seriously. Apart from this late payment, I have an excellent repayment record for all my debts.
The reason I made a late payment is that I did not receive my [name of bank] card by post. I recently moved to a new house and the card was sent to my old address. I had forwarded the mail in place, but somehow the letter did not reach me. As a result, I did not have my account number and was unable to open an account online. Therefore, I missed my reminder to pay my January 2021 payment.
As soon as I realized this error, I contacted [Bank] by phone on April 20 to explain the situation and order a replacement [Bank] card. (My request confirmation number: #123456789). My replacement card arrived in the mail on April 28th and I immediately activated my account online and turned on autopay so I would never miss a payment again.
I plan to apply for a mortgage soon, and it has come to my attention that the missed payment on my file will affect my ability to qualify. I sincerely believe that this single late payment does not reflect my solvency and my commitment to repay my debts.
It would help me immensely if you could give me a second chance and make a goodwill adjustment to remove the January 2021 late payment from my credit report.
Thanks for your consideration. I hope you will approve my request.
Three weeks later, on May 21, I received an email alert that a new communication was waiting for me in my account inbox. Bingo. He read:
Dear [My Name],
Thank you for contacting us regarding your [Bank name] Account.
We have submitted a request to the major credit bureaus to remove any payment defaults that occurred from 12/18/2020 to 01/19/2021. Please note that it can take up to 60 days for the credit bureaus to update their records.
We appreciate your business. Our experienced team of customer service specialists are ready to help if you need further assistance.
Between April and May, my credit score jumped 84 points, from 724 to 808.
2. I requested an increase in the line of credit
I’m not sure how much of that 84 point increase was due to my goodwill letter. Because in the same month, I made another free and quick move to improve my credit.
This time, I focused on the second most important factor that goes into credit score weightings: the rate of credit utilization. It’s a way to compare the amount of money you owe against the total amount of credit you have access to. For example, if you have credit card debt of $1,000 and your total line of credit is $10,000, you have a credit utilization rate of 10%. The lower your ratio, the better. It represents 30% of your FICO score.
Aside from the new credit card I opened and quickly missed a payment on, I generally only use one card: a simple cashback card with no annual fee. It serves my needs well, so in the seven years I’ve had it, I haven’t given much thought to it other than paying my balance in full each month.
But by separating my credit score and the factors related to it, I realized that I could improve my utilization rate by increasing the credit limit on my card.
To increase your line of credit, all you have to do is ask. My bank has a feature on their website where you can request a line of credit increase online. I pulled it out, entered some information, including my employment status, estimated annual income, and amount of raise requested.
I clicked submit, expecting him to start some sort of review process. But I was wrong. On the next screen, I was informed that my line of credit had instantly more than doubled.
If you have a good history of paying your credit card bills, will use the Line of Credit Extender responsibly, and are making more money than when you last assessed your credit limit , you may be able to increase your credit limit. too much.
Some issuers automatically grant line of credit increases after a certain period of time or check regularly if you are eligible for them. Read your card’s contract and terms for more information.
A few months later, with my credit score comfortably in the 800s, I decided to push my luck and apply for another line of credit increase. Again, it was instantaneous: in about 15 minutes, I increased my line of credit again, this time by another 50%.
In November, my score had reached a new high: 824. Now it was excellent.
Credit scores don’t matter until they suddenly do, like when you want to buy a house, take out a loan, or apply for a credit card.
I was able to significantly increase my score in just one month, but that was mainly due to my long experience of paying my bills on time. The truth is, building a good credit rating is all about taking responsible financial action over a long period of time.
Start as soon as you can. It’s up to you to check and monitor your credit, correct any mistakes you might find, and learn about the factors that go into your credit score so you can take action now to raise it.
As for me, I will check my credit report every few months and monitor my credit utilization rate, especially if my financial situation changes. But I won’t be writing goodwill letters anymore, as I don’t expect to miss any more payments.