Goodwill Letter: Late Student Loan Payments on Credit Report
One of the most compelling reasons to go to college is to improve your future prospects, and few things can dampen those future prospects as much as a poor credit report. Once you have entered student loan repayment, and if you should miss a payment (or payments), it is important to know that the delinquency may appear on your credit report.
According to Federal Student Aid, an office of the United States Department of Education, student loan lenders and servicers report all delinquencies of at least 90 days to the main credit reporting bureaus. There are three main credit reporting bureaus, as follows:
In the event that a student loan delinquency is reported, there is help; a goodwill letter can work to remove the credit blemish from your report.
What Is a Goodwill Letter?
If you have missed a student loan payment, you are not alone. A goodwill letter is a helpful way to be vigilant about credit repair and realize that you can work with your lenders in the event of financial hardship.
As the name suggests, a goodwill letter is a written correspondence (letter or email) which you will personally draft and send to your student loan lender(s) in an effort to pull on their customer service heartstrings. Lenders have an interest in maintaining friendly relations with their clients. These banks want your future business, like providing you with a mortgage when you buy your first home.
Tone and facts are everything. At the outset, you will want to make sure that the delinquency was in fact reported to the credit bureaus. You will then need to gather information on your student loans, such as the account numbers for each loan in delinquency.
According to Trees Full of Money, the following are essential elements of a good goodwill letter:
- A friendly and respectful opening statement
- Thank the company for serving as your student loan lender
- Take accountability for the late payment(s)
- Briefly explain how the delinquency happened
- Explain why it is important to have the delinquency removed from your credit reports
- Thank the lender for their assistance
Where to Send Your Goodwill Letter
Goodwill letters can work for both federal and private loans. If you do not know which entity is servicing your federal loans, visit NSLDS. For private loans, review mailings you have received or contact the credit reporting bureau to inquire as to which lender(s) reported the delinquency. If your account is in collections, you should contact the collection agency directly.
Once you know which entity services the delinquent loan, you will need to direct your goodwill letter to the appropriate department. Loan servicers are usually composed of multiple departments, and to avoid delays, it is best to contact the servicer directly and ask where to send correspondence about a customer service matter.