It was good, but I wanted it to be excellent.
Earlier this year, I noticed that a late payment had dropped my credit score to 700: above average for my age, but below the upper range that creditors – especially mortgage lenders – reward with the best interest rates and terms.
Repairing a damaged credit score can take a long time. As I quickly realized, my late payment would stay on my credit report for seven years, weighing down my score the entire time. It can also be costly. 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, that increased my credit score by 84 points in a month – and over 100 points in total during 2021.
Here’s how I did it and how you could do it too – including a template letter you can adapt that helped me clear my late payment from my credit report.
If you are seriously in debt, have a complicated situation, or just need one-on-one advice, look for free or low-cost offers. nonprofit credit counselors.
1. I wrote a “letter of goodwill”
Missed or late payments are a sure-fire way to reduce your credit, as payment history is the most influencing 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 care, I discovered that I had missed a payment due in January, causing it to be delayed by several months. Discouraged by the prospect of paying the price for seven years (while a default flagged as late payment remains on your report), I looked for ways to reverse the error more quickly.
I wrote what is called a goodwill letter, a polite way of asking your lender to change the way they report certain behavior to the three credit bureaus responsible for compiling credit reports. Your lender is under no obligation to accept this request, and in fact the banks are Required by law to communicate accurate information to credit bureaus. Some, including chase away and Bank of America, state on their websites that they will not make goodwill adjustments for late payments.
But anecdotal evidence suggests that at least some creditors are prepared to adjust to late payments. If you can show 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 in about 30 minutes after reading stories online from other successful people. There I explained how my late payment was the result of opening a card with a new bank and not knowing 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 that was 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. Aside from this one late payment, I have an excellent repayment record for all of my debts.
The reason I made a late payment is because I did not receive my [name of bank] card by post. I recently moved into a new house and the card has been sent to my old address. I had set up mail forwarding, but the letter somehow did not reach me. As such, I did not have my account number and was unable to create an account online. As a result, 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. (Confirmation number of my request: # 123456789). My replacement card arrived in the mail on April 28, and I immediately activated my online account and enabled automatic payment so that I would never miss a payment again.
I plan to apply for a mortgage soon, and have learned that the missed payment on my file will affect my ability to qualify. I really believe that this late payment alone does not reflect my creditworthiness and my commitment to repay my debts.
It would help me tremendously if you could give me a second chance and make a goodwill adjustment to remove the late payment for January 2021 from my credit report.
Thanks for your consideration. I hope you will accept my request.
Three weeks later, on May 21, I received an email alert that there was a new communication waiting for me in my account inbox. Bingo. He was reading :
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 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 value your business. Our experienced team of customer service specialists are ready to assist you should you require further assistance.
Between April and May, my credit score jumped 84 points, from 724 to 808.
2. I requested a line of credit increase
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 gesture to improve my credit.
This time, I focused on the next most important factor that goes into weighting credit scores: the credit utilization rate. 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 $ 1,000 in credit card debt and your total line of credit is $ 10,000, you have a use of credit 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 usually only use one card – a simple cash back card with no annual fee. It meets my needs well, so in the seven years that I have it, I haven’t given it much thought beyond paying my balance in full each month.
But as I distinguished my credit rating and the factors that go into it, I realized that I could improve my usage rate by increasing the credit limit on my card.
To increase your line of credit, just ask. My bank has a feature on their website where you can request a credit limit increase online. I retrieved it, entered information including my employment status, estimated annual income, and the amount of increase requested.
I hit submit, expecting it to start some sort of review process. But I was wrong. On the next screen, I was informed that my credit line had instantly more than doubled.
If you have a good history of paying your credit card bills, know that you will be using the extended credit limit responsibly and making more money than the last time your credit limit went. been assessed, you may be able to increase your credit limit too.
Some issuers automatically grant line of credit increases after a certain period of time or check regularly to see if you are entitled to them. Read your card contract and terms for more information.
A few months later, with my credit score comfortably in the low 800s, I decided to push my luck and apply for another increase in the line of credit. Again, it was instantaneous: in about 15 minutes I increased my line of credit again, this time again by 50%.
By November my score had hit 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 dramatically increase my score in just a month, but that was mainly due to my long experience of paying my bills on time. The truth is, getting a great credit score requires 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 errors you might find, and educate yourself on the factors that go into your credit score so that you can take action now to increase it.
As for me, I will check my credit report every few months and keep an eye on my credit utilization rate, especially if my financial situation changes. But I won’t be writing goodwill letters anymore – because I don’t intend to miss any other payments.