Letters to Fix Your Credit

Damage to your credit report from negative trade lines, missed payments and other derogatory information can haunt you for years -- leaving you subject to application denials and high interest rates. Fortunately, you can mitigate the credit damage you suffer and improve your credit score by working to rid your report of the information causing the damage.

Dispute Letter

The Fair Credit Reporting Act notes that consumers who disagree with the information within their credit reports can dispute that information with the creditor that originally made the report and the credit bureaus.

When writing a dispute letter, the Federal Trade Commission recommends that consumers provide as many details as possible concerning which information is inaccurate. Back up your claims with copies of documents that support your position. Both the original creditor and the credit bureaus must conduct an investigation into your dispute and both have the ability to amend or delete derogatory information that they cannot verify as accurate.

Debt Validation Letter

The FCRA notes that collection accounts marring your credit record will remain in place for seven years. Fortunately, the Fair Debt Collection Practices Act requires collection agencies to validate information not only to the credit bureaus but to consumers as well. A debt validation letter is a request for a collection agency to validate the accuracy of its information to you. If the company cannot provide you with proof that you owe the debt it inserted into your credit history, it must remove its trade line from your credit report.

Goodwill Letter

A goodwill letter does not make threats or demands but can prove an instrumental weapon in the war on bad credit. Goodwill letters combat missed payment notations on your credit report. On the Fair Isaac Corporation's website, MyFICO.com, it notes that, because your payment history is responsible for 35 percent of your credit score, missed payments to creditors can significantly damage your credit rating.

Your goodwill letter should state the reason behind your missed payment and make a solid vow never to do so again. It should then request that the creditor modify your credit records as a gesture of goodwill. Goodwill letters are most effective when removing a single missed payment rather than a series of financial mistakes.

Inquiry Removal Letter

Lenders must review your past credit information before awarding you a new loan or credit card. Unfortunately, lenders, creditors and collection agencies conduct hard credit inquiries when accessing your information. Hard credit inquires adversely affect your score.

The FCRA does not allow companies to conduct hard inquires if they do not have permissible purpose under the law for doing so. Thus, if you did not fill out an application for credit or the collection agency in question does not own your debt, the company cannot legally pull your credit report and lower your credit score in the process.

An inquiry removal letter notifies the company that you are aware of its inquiry, informs the establishment that it did not have permissible purpose under the FCRA to review your credit information and demands that the company immediately remove its inquiry from your credit history.