When you make a mistake, it’s natural to try to correct it. Asking for forgiveness often seems to be the best choice. Our ego should never be so big that we can’t acknowledge we were wrong. This is especially true when it comes to issues involving friends, family and romantic partners.

There is one important, unusual exception to this rule: When you’re dealing with credit reporting agencies and creditors. In these situations, asking for forgiveness through a goodwill letter, whether for a late payment or a charge-off, typically does not work. As credit attorneys, we’ve seen this approach fail pretty often. 

The good news is, there is a better approach: Disputing the negative item, and trying to get it removed through the credit repair process, is often a better strategy. Let’s take a closer look.

Why Goodwill Letters Usually Don’t Work

First, let’s define what we’re talking about. Goodwill letters are communications where you typically acknowledge that you paid an account late, or that an account was charged off. At the same time, you are requesting that you not be marked late, or listed as charged off. Essentially, you’re requesting an exception to the creditor’s rules.

In such a situation, you probably have a reason why you believe you should be granted an exception. Perhaps you were dealing with a medical issue, and paid late since you were undergoing treatment. Maybe you lost your job, and it was tough to meet your obligations. Whatever the reason, something happened in your life. You’re seeking to undo the damage 

Here’s the issue: creditors (like your credit card or auto loan company) have an obligation to report credit information accurately to the credit agencies (like Experian, Equifax and TransUnion). This requirement falls under the Fair Credit Reporting Act (known as the FCRA). The FCRA is the primary federal law governing credit reporting.

Now, we know that the credit agencies and the creditors are sued thousands of times each year for violating the FCRA. Therefore, they can’t be taking their obligation to report accurate credit information very seriously. 

However, if you ask a creditor to remove a negative item from your credit reports, and that item is factually accurate, they fall back on arguments about their obligations to report accurate information. Essentially, what they’re telling you is “You really did pay late – and you admitted it in your goodwill letter. If we say you were not late, we’re reporting inaccurate information. By doing so, we’re violating the FCRA.” 

Your efforts to be transparent about what you’re dealing with have come back to haunt you. This is a big reason why goodwill letters so often don’t work. 

This isn’t to say that goodwill letters always fail. Sometimes, you get lucky. However, in most cases, the fact that you’ve admitted negative information is accurate comes back to haunt you.

An Alternative: Disputing Negative Credit Items

Instead of admitting fault, and sending goodwill letters, you should consider disputing negative information on your credit reports. Through disputing, you’re arguing either that the negative information is innacurate, or that there was a valid reason for why the negative history resulted.

Let’s say your credit card was charged off. As we’ve discussed elsewhere, there are strategies for removing such accounts from your credit reports, even when they belong to you. Some part of the account is usually innacurate or incomplete, and that can be grounds to have it removed, typically using the arbitration process.

Typically, this approach starts with a dispute letter, send to the credit reporting agencies Experian, Equifax and TransUnion. As you work through the process, you might also dispute with the credit card issuer, and point out further discrepancies.

With late payments, you might have a valid reason you were late. Perhaps you were the victim of a natural disaster, or faced a payment processing error that was the fault of the creditor. In such situations, it’s best to dispute the late payment with the credit reporting agencies, and provide proof of what you’re claiming. You’ll then want to dispute directly with the creditor.

In any of these situations, you’re not begging the credit agencies or credit card issuer to accommodate you. You’re instead making factual and legal arguments, and operating from a position of knowledge and strength.

Credit Dispute Basics

You should avoid disputing with creditors or credit reporting agencies online. Doing so can lead to a less effective investigation, and hinder some of your legal rights. 

Instead, use USPS certified mail for all disputes. Write your disputes in plain English, and state clearly what you believe the errors are.

Your dispute letter should typically contain your full name, Social Security Number, date of birth and mailing address. If you’re writing to a credit reporting agency, you should also include your photo ID and proof of your mailing address.

The Final Word

It’s understandable why so many people believe that goodwill letters are a wise strategy. If you make a mistake, it seems smart to take responsibility, and ask for forgiveness.

As you can see, when it comes to credit, this strategy doesn’t work very well. Fortunately, disputing negative credit information which you believe is inaccurate, is a much better strategy. Give it a try.